June Sees Mixed Real Estate Trends: Pending Home Sales Bounce Back, While Inventory Challenges Persist
Pending home sales recovered in June from a three-month decline, increasing 1.5% for the month according to the National Association of Realtors’ Pending Home Sales Index (PHSI). The index is a forward-looking indicator based on contracts for existing home purchases, which are generally expected to result in completed transactions in about two months. The index in the West grew 2.9% in June but is still 1.1% below a year ago.
The S&P CoreLogic Case-Shiller National Home Price Index hit another new record in May, marking the sixth consecutive month. The National Index, which covers all nine U.S. census divisions, rose 5.6% on an annual basis, the same increase it posted in April. Of note, the index is now 3.2% higher than its previous peak in July 2006 and has risen by 42.2% since hitting its bottom in February 2012.
“Home prices continue to climb and outpace both inflation and wages,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
“Housing is not repeating the bubble period of 2000- 2006; price increases vary across the country unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging.”
On the other side of the coin, the National Association of Realtors (NAR) reported that existing home sales fell in June as low inventory levels continue to be problematic. NAR said sales of existing single-family residences; townhomes, condos, and cooperative apartments were down 1.8% in June, to a seasonally adjusted annual rate of 5.52 million units, the second slowest performance of the year.
The number of available homes for sale fell again in June, down 0.5% from May to 1.96 million units. A year ago, the inventory was 2.11 million units and it has now fallen year-over-year for 25 straight months.
Properties typically stayed on the market for 28 days in June, one day more than in May, but six days fewer than in June 2016. 54% of homes sold in June were on the market for less than a month. Existing home sales in the West declined 0.8% to an annual rate of 1.21 million, but remain 2.5% higher than last June. The median price in the West was $378,100, up 7.4% on an annual basis.
Finally, the U.S. homeownership rate rose by 0.1% in the second quarter of 2017, to 63.7% according to the U.S. Census Bureau. The rate has trended down since the Great Recession after peaking in 2004 at 69.2%. Homeownership is highest in the Midwest at 68% and lowest in the West at 58.9%.