For the first time in a while, a home sales report was better than expected. Pending home sales fell less than expected in July, according to the National Association of Realtors…(NAR)
- M-O-M: The Pending Home Sales Index fell 1.0% to 89.8 in July, this is the eighth time in the last nine months the index has fallen. An index of 100 is equal to the level of contract activity in 2001.
- Y-O-Y: Pending transactions fell 19.9% when compared to the same time last year.
South remains above 100. In the South, the pending home sales index only fell 1.1% which kept the index above 100 at 106.6. The Midwest was number two with a PHSI of 91.2 after a 2.7% drop in July followed by the Northeast at 79.3 (-1.9%) and the West at 70 (+2.2%).
- Good news. It’s been a while since this happened but economists had projected a bigger drop of 3.8% in July.
- Bad news. Housing affordability plummeted to its lowest level since 1989. Assuming a 30-year fixed-rate mortgage and a 20% down payment, the monthly mortgage payment on a typical home jumped to $1,944, an increase of 54%, or $679, from one year ago.
Near the bottom. Lawrence Yun, NAR Chief Economist, believes we may be close to the bottom of contract signings. “In terms of the current housing cycle, we may be at or close to the bottom in contract signings…This month’s very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity.”