Pending home sales in the U.S. pulled back sharply in the month of June, according to a report released by the National Association of Realtors on Wednesday.
NAR said its pending home sales index plunged by 8.6 percent to 91.0 in June after rising by 0.4 percent to a revised 99.6 in May.
Economists had expected pending home sales to slump by 1.5 percent compared to the 0.7 percent increase originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
With the much bigger than expected monthly decrease, pending home sales in June were down by 20.0 percent compared to the same month a year ago.
“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.
He added, “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.”
Yun said home sales are expected to tumble by 13 percent in 2022, according to NAR’s latest projections, but he predicted home sales should start to rise by early 2023 as mortgage rates stabilize near 6 percent and job creation remains steady.
The report showed pending home sales decreased in all four major regions of the country, with the West leading the way lower with a 15.9 percent nosedive.
Pending home sales in the South and Northeast also tumbled by 8.9 percent and 6.7 percent, respectively, while pending sales in the Midwest slumped by 3.8 percent.
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