Pending home sales tumbled in June after a slight increase in May, falling 8.6% month-over-month and 20% YOY.
The National Association of Realtors’ Pending Home Sales Index posted a reading of 91 last month. A reading of 100 is equal to the level of contract activity in 2001.
The PSHI is a forward-looking indicator of home sales based on contract signings.
“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.”
Buying a home is now 80% more expensive than in June 2019. This means that almost 25% of people who bought a home three years ago would be priced out of buying a median-priced home today.
All four regions saw declines both month-over-month and from the same time last year. Pending sales in the Northeast dropped 6.7% from May and 17.6% YOY, while the Midwest index dropped 3.8% in June and 13.4% YOY.
Sales in the South fell 8.9% from June and 19.2% YOY, while the West saw sales down 15.9% and 30.9%.
“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.”