Pending home sales increased 3.3% in July compared to June, but were still 2.1% below July 2013, the National Association of Realtors (NAR) reports.
Pending home sales have been on the rise since April – however, they declined 1.1% in June compared to May. The biggest increase so far this year came in May, when pending sales rose 6.6% compared to April. The increases in May and April were relatively modest by comparison.
Helping to drive the increase in pending home sales in July was a slight decline in mortgage interest rates in June, coupled with the fact that inventory has increased. Also helping is the fact that home price appreciation has slowed.
‘Interest rates are lower than they were a year ago, price growth continues to moderate and total housing inventory is at its highest level since August 2012,’ says Lawrence Yun, chief economist for NAR, in a statement. ‘The increase in the number of new and existing homes for sale is creating less competition and is giving prospective buyers more time to review their options before submitting an offer.’
Yun adds that an improving job market is also ‘helping family finances and giving them added confidence to enter the market.’
All major regions experienced healthy gains except for the Midwest, which saw pending home sales decline 0.4%. In the Northeast, pending home sales jumped 6.2%; in the South, they increased 4.2%; and in the West, they rose 4.0%.
Earlier this month, NAR reported that existing-home sales increased to a seasonally adjusted annual rate of 5.15 million in July, an increase of 2.4% from the 5.03 million in June and the highest annual pace so far this year. It was the fourth consecutive month that existing-home sales increased on a month-over-month basis.
Still, existing-home sales remain 4.3% below the 5.38 million-unit pace seen in July 2013.
Yun forecasts that existing-home sales will reach 4.98 million this year – down about 2.1% compared to 5.09 million in 2013. Most of the decline came in the first quarter of this year, when many Americans were dealing with one of the harshest winter seasons on record.
Yun further predicts that the national median existing-home price will increase 5% to 6% this year and another 4% to 5% next year.