Is the Housing Market Run Over?
Existing and pending home sales reported by the National Association of Realtors. Photo: Reuters)
The National Association of Realtors said Thursday its pending home sales index rose only 0.5% in July, indicating the housing market again is losing steam. The index, which is based on signings for purchases of previously owned homes, rose to a seasonally-adjusted 110.9, from an upwardly revised reading of 110.4 in June.
Economists surveyed by The Wall Street Journal had expected a 1% rise in July.
“Led by a solid gain in the Northeast, contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer,” said Lawrence Yun, chief economist for NAR. “While demand and sales continue to be stronger than earlier this year, Realtors have reported since the spring that available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust.”
Yet, there is reason for optimism. Home sales typically close within a couple of months after signing and the index rose 7.4% in July from a year earlier, which is the 11th consecutive annual increase. But Yun did warn recent stock market volatility could cause some buyers to delay buying a home out of an abundance of caution.
“In light of the recent volatility in the stock market, it’s possible some prospective buyers may err on the side of caution and delay decisions, while others may view real estate as a more stable asset in the current environment,” said Yun. “Overall, the prospects for ongoing strength in the housing market remain intact for now. The U.S. economy is growing — albeit at a modest pace — and the labor market continues to add jobs.”
However, Yun also warned that “available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust.”
The average interest rate for a 30-year fixed-rate mortgage was 4.05% in July, according to Freddie Mac, but was back down to 3.84% last week.
REGIONS
The readings were mixed across regions. The PHSI in the Northeast increased 4.0 percent to 98.8 in July, and is now 12.1 percent above a year ago. In the Midwest the index remained unchanged at 107.8 in July, and is now 5.7 percent above July 2014.
Pending home sales in the South increased slightly (0.6 percent) to an index of 124.2 in July and are now 6.5 percent above last July. The index in the West declined 1.4 percent in July to 103.0, but is still 7.5 percent above a year ago.
