June Sees Dip in Pending Home Sales
If housing is a key engine to drive construction activity, don't be surprised if your contractor customers are scratching their heads. Last week's report on new construction single family homes dropped and today the Pending Home Sales Index - tracking sales of previously owned homes - dipped 1.1% compared to last month, and 7.3 % lower than June 2013.
After three consecutive months of solid gains, pending home sales slowed modestly in June, is how the National Association of Realtors explained the PHSI numbers. The index is a forward-looking indicator based on contract signings. It is at 102.7 in June, down from 103.8 in May, and down from June 2013 index of 110.8. Despite June’s decrease, the index is above 100 – considered an average level of contract activity – for the second consecutive month after failing to reach the mark since November 2013 (100.7).
Lawrence Yun, NAR chief economist, says the housing market is stabilizing, but ongoing challenges are impeding full sales potential. He said activity is higher this year because prices moderated and inventory levels improved. He cites supply shortages in parts of the country, flat wages and tight credit as deterrents, despite low interest rates.
Yun expects a slight uptick in sales during the second half of the year because the rate of increase for current home prices is slowing. The increase in rental rates may also tip people to decide if they should buy or keep renting. Yun forecasts existing-homes sales to be down 2.8 percent this year to 4.95 million, compared to 5.1 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and in 2015. Here's the association's news release.
Reuter's termed the drop "unexpected." Reporter Moriah Costa said the decline came againt economists' expectations for a 0.5 percent gainand followed three straight months of increases. Pending home sales, which lead sales by a month or two, increased 6.0 percent in May. Economists . . . were not fazed by the drop, she reported. "The June pullback could be seen largely as a correction in a broadly improving trend, with housing data remaining somewhat choppy as the sector gradually continues to recover," said Gennadiy Goldberg, an economist at TD Securities in New York.
Read the Reuter's article here.
PRO CONTRACTOR RENTALS MAGAZINE
Pro Contractor Rentals provides information of value to rental centers who focus time, resources and attention on meeting the demands of construction contractors and other equipment rental customers.
