The number of contracts to purchase previously owned U.S. homes unexpectedly rose in June as buyers tried to take advantage of lower prices and borrowing costs.
The 2.4 percent rise in the index of pending home resales followed an 8.2 percent May gain, the National Association of Realtors said today in Washington. Economists forecast a 2 percent drop, according to the median estimate in a Bloomberg News survey.
Estimates for pending home sales ranged from a drop of 5 percent to an increase of 8 percent, according to 39 forecasts in the Bloomberg survey. Pending sales rose 17 percent from June 2010.
From the WSJ:
This week’s reports on the housing market have been decidedly mixed.
On Tuesday, the government said new home sales were down 1% on a monthly basis in June. Also that day, the S&P/Case-Shiller index of home prices in 20 major U.S. cities was down 4.5% in May from a year earlier.
But today’s news was positive and unexpected: The National Association of Realtors’ seasonally adjusted index for pending sales of existing homes rose 2.4% on a monthly basis to a reading of 90.9 in June. Economists had forecast a 2% drop.
Peter Newland, economist, Barclays Capital: “The gains in May and June largely offset the sharp 11.2% decline in April, which likely owed in part to adverse weather conditions in much of the country. Indeed, the level of the index, at 90.9 in June, is back broadly in line with the (first-quarter) average….This is an encouraging report with regard to the outlook for existing home sales, which tend to lag pending sales by a month or two.”
Ian Shepherdson, chief U.S. economist, High Frequency Economics: “The underlying trend in existing home sales is more or less flat, and it is hard to imagine any near-term change as long as applications for mortgages to finance house purchase(s) are flat, too. In this context, the gains in pending home sales in May and June are probably best considered as nothing more than a rebound after the very late Easter and severe weather depressed the index in April.”
From the NAR:
Pending home sales increased in June following a wide swing down in April and then up in May, according to the National Association of Realtors®. Activity increased in the West and South but declined in the Midwest and Northeast; all regions show strong double-digit gains from a year ago.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 2.4 percent to 90.9 in June from 88.8 in May and is 19.8 percent above the 75.9 reading in June 2010, which was the low point immediately following expiration of the home buyer tax credit. The data reflects contracts but not closings.
The PHSI in the Northeast slipped 0.4 percent to 68.9 in June but is 19.4 percent higher than June 2010. In the Midwest the index fell 3.7 percent to 79.7 in June but is 26.4 percent above a year ago. Pending home sales in the South increased 4.4 percent to an index of 99.2 and are 19.1 percent higher than June 2010. In the West the index rose 6.4 percent to 107.0 in June and is 16.4 percent above a year ago.