From the WSJ:
Another housing report shows that market activity is up considerably from one year ago but easing off of the levels set by a surge of transactions earlier this year.
A report Thursday by the National Association of Realtors showed the index of pending home sales, reflecting deals that have gone into contract but haven’t yet closed, fell in June by 1.4% from May, though activity was still above the level of one year ago by 9.5%.
The report is the latest indication of an uneven housing bottom — things aren’t getting better rapidly, but we’re also not in the “hold-your-hat” declines of 2010 or the “spring that never materialized” of 2011. The report is also a reminder that a recovery will have trouble taking hold without meaningful job and wage growth, which has slowed in recent months.
June’s reading is slightly below the level set in both March and May of this year. But it is better than any reading in 2011 and better than all but two months in 2010, when federal tax credits spurred a burst of sales activity. It was the highest level for the month of June since 2007.
After a strong start to 2012, other sales indicators have hinted at a slowdown in June. New-home sales fell by 8.4% from May, though they were still up by 15.1% from one year ago, according to a report Wednesday. Last week, the Realtors reported that sales of previously owned homes in June fell by 5.4% from May, though they were 4.5% the level of one year ago.
Both Thursday’s pending sales report and earlier reports that builder confidence is at a five-year high don’t quite fit with the recent sales drops. The Realtors have increasingly blamed smaller sales volumes on the dearth of attractive inventory. For-sale inventories in June were down 24.4% from one year ago, the largest annual drop in at least 30 years.
The market faces other challenges: Many buyers can’t qualify for mortgages because they have too much debt. And many sellers can’t sell their house because they owe more than it is worth, depriving the market of all-important “trade-up” buyers. Both of these problems won’t be fixed overnight.
Prices are rising, however, because the number of homes for sale is down sharply from one year ago in many markets.