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Two new data reports point to a rising number of home sales, but a third report is showing a decline in mortgage applications.
The National Association of Realtors’ (NAR) Pending Home Sales Index saw a 0.2 percent uptick to 111.0 in June from 110.8 in May; on a year-over-year measure, the index is up one percent. While last month’s upward movement was scant, it nonetheless moved the index to its second highest reading over the past 12 months.
On a regional basis, the index rose 3.2 percent to 96.0 in the Northeast and 0.8 percent to 108.9 in the Midwest. But pending home sales fell 0.6 percent in the South to 125.9 and slid 1.3 percent in the West to 101.3.
“With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cool down after a very active spring,” said Lawrence Yun, NAR chief economist. “Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6 percent from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.”
And the people buying homes were mostly avoiding cash-only transactions. Less than one-third of all home sales in April were cash transactions, according to new data from CoreLogic. April’s 31.6 percent cash sales share was down 1.6 percent from March and down 2.8 percent from April 2015. Florida had the largest cash sales share of any state at 45.5 percent, followed by Alabama (45.3 percent), New York (44.2 percent), New Jersey (38.2 percent) and Indiana (38 percent).
Separately, the U.S. Census Bureau and the Department of Housing and Urban Development announced that sales of new single-family houses in June 2016 were at a seasonally adjusted annual rate of 592,000, which is 3.5 percent above the revised May rate of 572,000 and is 25.4 percent above the June 2015 estimate of 472,000. The median sales price of new houses sold in June 2016 was $306,700, while the average sales price was $358,200.
The seasonally adjusted estimate of new houses for sale at the end of June was 244,000, which would represent a 4.9-month supply at the current sales rate. Robert Dietz, chief economist at the National Association of Home Builders (NAHB), greeted the data with enthusiasm.
“The fact that new home sales reached their highest pace in over eight years shows the housing market is gaining momentum,” said Dietz. “The market should continue to firm throughout the year, propelled by low mortgage interest rates and solid growth in employment.”
But while sales were inching upwards, mortgage applications were not. The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 22 was mostly dreary. The Market Composite Index decreased 11.2 percent on a seasonally adjusted basis and 11 percent on an unadjusted basis from one week earlier.
The seasonally adjusted Purchase Index decreased three percent from one week earlier and reached its lowest level since February 2016. The unadjusted Purchase Index also decreased three percent compared with the previous week, although it was 12 percent higher than the same week one year ago. The Refinance Index decreased 15 percent from the previous week while the refinance share of mortgage activity decreased to 61.1 percent of total applications from 64.2 percent the previous week.
However, there was some upward movement with the federal home loan programs. The FHA share of total applications increased to 10.1 percent from 9.9 percent the week prior, while the VA share of total applications increased to 11.9 percent from 11.2 percent and the USDA share of total applications increased to 0.6 percent from 0.5 percent the week prior.