July Pending Home Sales in Steepest Drop So Far This Year

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Just imagine what will happen when the government stops pouring billions of dollars into the housing market.  Please read the article below and let me know what you think.

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Responding to higher mortgage rates and higher prices, the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI) slipped 1.3 percent in July—the steepest decline this year—to 109.5, the group reported Wednesday. Economists had expected the index for July would drop to 109.8, which would have been a 1.0 percent decline from June’s 110.9. The June index was unchanged.

The index covered the same month in which new home sales, reported last week by the Census Bureau and HUD, plunged 13.4 percent to a seasonally adjusted sales pace of 394,000, the lowest rate of the year. Like the PHSI, new home sales are tracked when buyers sign contracts. The existing-home sales report, also a product of NAR, is based on closed transactions.

Although the group downplays monthly price changes when it reports closings, NAR economist Lawrence Yun cited higher prices as affecting new contracts.

“Higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West,” Yun offered as an explanation for the drop in the PHSI.

The Case-Shiller Home Price Indices for June, reported Tuesday, rose 2.2 percent to their highest levels in almost five years.

Increasing rates and prices, though, could also serve as a catalyst for contracts and sales as buyers rush to lock in prices or rates before they go higher.

The drop in the July PHSI was the second monthly decline, the first time the index has fallen for two straight months since last November and December. At 109.5, the index is at its lowest level since April.

To see the complete article – please use the link below.

Home Sales in Steepest Drop

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