The U.S. housing market suffered another modest setback in June as pending sales of homes fell 2.6%, the National Association of Realtors announced Tuesday. A Bloomberg survey had expected the measure to fall by a more substantial 3.7%. Still, pending sales are now 18.6% lower than the June 2009 figure.
By region, une pending sales plunged 12.2% in Northeast, sank 9.5% in the Midwest, dipped 0.2% in the West and rose 3.7% in the South.
In general, economists view new- and existing-home sales statistics as more-accurate indicators of housing activity than pending sales, due to the number of transactions that fall through because of mortgage problems, title issues, liens and other complications that sometimes prevent signed housing contracts from being finalized.
"Inventory Will Look High"
Lawrence Yun, NAR chief economist, said it may take a few months for sales to stabilize, following the increases prompted by the federal homebuyer tax credit, which ended April 30.
"There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve," Yun said in a statement. "Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn't likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices."
Yun added that he expects mortgages rates "to remain historically low for the balance of the year." The average rate Tuesday for a conventional, 30-year, fixed-rate mortgage for borrowers with excellent credit was 4.57%, according to bankrate.com.
More Jobs Will Mean More Home Sales
However, Yun added that the job market remains the major unknown factor in the home sales equation. "We really need to see stronger job creation to have a meaningful recovery in the housing markets," Yun said.
Further, with inventories of new homes (7.6-month supply) and existing homes (8.9-month supply) at very high levels, the U.S. economy will have to generate impressive growth of more than 125,000 new jobs per month over several quarters to return home inventories to normal three- to five-month levels.
Pending Sales for U.S. Homes Fell 2.6% in June