Pending home sales in the U.S. rebounded by much more than anticipated in the month of June, according to a report released by the National Association of Realtors on Monday.
NAR said its pending home sales index climbed by 0.9 percent to 106.9 in June after falling by 0.5 percent to 105.9 in May. Economists had expected pending home sales to inch up by 0.1 percent.
Despite the much bigger than expected increase, pending home sales in June were down by 2.5 percent compared to the same month a year ago, reflecting the sixth straight year-over-year decrease.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
“The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates,” said NAR chief economist Lawrence Yun. “Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand.”
He added, “As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”
The monthly rebound in pending home sales reflected increases in pending sales in all four major regions in June.
Pending home sales in the Northeast and South lead the way higher, jumping by 1.4 percent and 1.1 percent, respectively. Pending sales also rose by 0.7 percent in the West and 0.5 percent in the Midwest.
Heading into the second half of the year, Yun forecasts existing home sales to decrease by 1.0 percent to 5.46 million in 2018 from 5.51 million in 2017. The national median existing home price is expected to surge up around 5.0 percent.