US pending home sales rose modestly in July
WASHINGTON (AP) -- Slightly more Americans signed contracts to buy homes in July, as pending sales edged up after dipping in June.
The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index rose 0.5 percent to 110.9 last month. This marks a slight recovery from June, when the index fell to 110.4 after reaching 112.3 in May, a level last seen in 2006.
Steady job growth coupled with low mortgage rates has improved home sales this year. As the recovery from the Great Recession enters its seventh year, more Americans have rebuilt their savings, increased their home equity and returned to the real estate market.
The modest increase in the index last month indicates that sales may soon be peaking after surging this year.
"The pending sales index has stalled, at least for now," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "This very strongly suggests that the recent run of big gains in existing home sales is over, with August sales more likely to fall than rise."
Pending sales are a barometer of future purchases. A lag of a month or two usually exists between a contract and a completed sale.
Completed sales of existing homes increased 2 percent in July to a seasonally adjusted annual rate of 5.59 million, the fastest pace in eight-and-a-half years, the Realtors said last week. But the market has also revealed a mismatch between rising demand and limited supplies of homes on the market. Sales have increased 9.6 percent over the past 12 months, while the number of listings has declined 4.7 percent.
The higher demand has largely emerged out of solid hiring since early 2014 and relatively low mortgage rates.
Over the past 12 months, employers have added 2.9 million jobs as the unemployment rate has fallen to 5.3 percent from 6.2 percent. The hiring has generated a greater sense of financial security that has boosted housing.
Mortgage rates have also remained roughly two percentage points below their historic levels.
The average 30-year fixed mortgage rate was 3.84 percent this week, according to mortgage firm Freddie Mac.