U.S. Pending Home Sales Edged Higher in June
28 July 2016 - 12:40AM
Dow Jones News
WASHINGTON—A measure of homes under contract for sale rose
slightly in June, as ongoing job growth and low interest rates
continued to support the U.S. housing market going into the second
half of the year.
The National Association of Realtors' pending home sales index,
which tracks contract signings for purchases of previously owned
homes, rose a seasonally adjusted 0.2% in June from the prior
month, the trade group said Wednesday. Sales then typically close
within a month or two of the signing.
Economists surveyed by The Wall Street Journal had expected a
larger rise of 1.8%, following May's drop of 3.7%.
The index stood at 111.0 in June, from May's reading of 110.8.
Compared with June 2015, the index has risen 1.0%.
June's reading was still the second-highest in the past 12
months, and a notch above the 2015 average of 108.9. But it was
noticeably lower than 2016's high of 115.0, reached in April. And
in May, the measure posted its first year-over-year decline since
August 2014.
Lawrence Yun, NAR's chief economist, said the weak June gain
reflected a "slight, early summer cool-down after a very active
spring."
News Corp., owner of The Wall Street Journal, also owns Move
Inc., which operates a website and mobile products for the National
Association of Realtors.
Pending sales were mixed in June across the country. A 3.2%
monthly rise in the Northeast gave the overall index a boost,
helped by a smaller rise in the Midwest. The index fell in June in
the West and the South from the prior month. On an annual basis,
pending sales in June were 1.6% to 1.8% higher than in June 2015 in
every region except the West, where they were down by a similar
magnitude.
The U.S. housing market has been posting steady gains in recent
years, helping boost overall economic growth. But the ongoing
strength of home sales has some industry observers worried that
shrinking inventory and rising prices will weigh on further gains
going forward.
In June, sales of existing homes rose to their strongest pace in
nearly a decade, NAR said last week. At that pace of sales, there
were 4.6 months' worth of existing homes on the market last month,
down from five months' worth in June of 2015, according to NAR. New
home sales, which account for about 10% of the market, were up
about 10% in the first six months of 2016 over the same period a
year ago, the Commerce Department said Tuesday.
Job growth has been slowing in 2016 compared with the prior
year, another potential headwind for the housing market, although
wage growth is starting to pick up. But interest rates, another key
factor supporting home purchases, continue to hover near
historically low levels. The average rate on a 30-year fixed-rate
mortgage in June was 3.57%, down from 3.87% in January, according
to Freddie Mac.
In June testimony to Congress, Federal Reserve Chairwoman Janet
Yellen noted that "housing has continued to recover gradually,
aided by income gains and the very low level of mortgage
rates."
On Wednesday afternoon, Fed officials will conclude a two-day
meeting in which they are discussing the state of the economy and
monetary policy.
Write to Anna Louie Sussman at anna.sussman@wsj.com
(END) Dow Jones Newswires
July 27, 2016 10:25 ET (14:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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