June Pending Home Sales Preview
The June Pending Home Sales Index is expected to fall 1% after dropping 4.7% in May and jumping 7.1% in April (a blip attributed to an early Easter that allowed for more April sales).
Last month, the National Association of Realtors didn’t deviate from its hammered-home theory suggesting timid US homebuyers are sitting on the sidelines, waiting for prices to come down and credit tightness to slacken.
The NAR predicts that pent-up demand will rush in at some point, putting a floor under housing market weakness and driving recovery. While this may be true, there is over a year’s supply of homes on the market — a lot of inventory to work through. Tomorrow, the NAR is almost certain to minimize that aspect while highlighting the recently enacted housing relief bill, which gives first-time homebuyers a $7,500 interest-free loan and permanently increases key loan limits.
On prices, the NAR predicted last month that the aggregate median cost of an existing home will fall 6.2% this year to $205,300, before a 4.3% rise next year. The median new home price is expected to fall 3.2% to $239,330 this year before gaining 5.3% next year.
If the credit squeeze does indeed loosen and prices fall, the NAR mayget its wish — but don’t hold your breath just yet. The bottom isn’t here yet, and tomorrow’s index should be more of the bad news we’ve come to expect from US housing market.
(Pending Home Sales are counted when the home contract has been signed, but before the transaction closes. Pending sales typically are finalized within a month or two of signing.)