Pending home sales (contracts signed) fell 8.6% in June from May, and 20% year over year, according to the National Association of Realtors (NAR). Sales in all regions contracted, led by the West where the biggest dip of 15.9% occurred, compared to April, and 30.9% compared to the June prior.
On the heels of yesterday’s Case-Shiller data revealing a slow down in home price surges, NAR is reporting that buying a home in June was nearly 80% more expensive than in June 2019.
Pair that with rising mortgage rates, buyers are simply fatigued, if not boxed out altogether.
“Contract signings to buy a home will keep tumbling down as long as mortgage rates keep climbing, as has happened this year to date,” said NAR Chief Economist, Dr. Lawrence Yun.
With the Federal Reserve expected to announce another rate hike this afternoon in another attempt to stop the proverbial bleeding of the impending recession, analysts appear to be in lockstep with Dr. Yun on this topic.
“There are indications that mortgage rates may be topping or very close to a cyclical high in July. If so, pending contracts should also begin to stabilize,” notes Dr. Yun.
NAR’s report also indicates that nearly one in four buyers who purchased a home three years ago would be unable to do so today because they no longer earn the qualifying income to buy a median-priced home today.
“Home sales will be down by 13% in 2022, according to our latest projection,” said Dr. Yun. “With mortgage rates expected to stabilize near 6% and steady job creation, home sales should start to rise by early 2023.”
Later today, Dr. Yun will be issuing his real estate forecast, so watch for that new data to roll out soon, and later this week, the GDP data will be unveiled, as will jobs data, so it’s a big week for the housing sector as the winds change.