Pending home sales decreased 8.6% in June, following a slight increase in May, according to the National Association of Realtors (NAR). All four major regions posted month-over-month and year-over-year pullbacks, the largest of which occurred in the West.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, dipped to 91.0 in June. Year-over-year, transactions shrank 20%.
"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 Lawrence Yun. "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."
According to NAR, buying a home in June was about 80% more expensive than in June 2019. Nearly a quarter of buyers who purchased a home three years ago would be unable to do so now 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," Yun said. "With mortgage rates expected to stabilize near 6% and steady job creation, home sales should start to rise by early 2023."
NAR reported that the Northeast PHSI slid 6.7% compared to last month to 80.9, down 17.6% from June 2021. The Midwest index dropped 3.8% to 93.7 in June, a 13.4% decline year over year.
The South PHSI slipped 8.9% to 108.3 in June, a decrease of 19.2% from the previous year. The West index plunged 15.9% in June to 68.7, down 30.9% from June 2021.
