Pending Home Sales Begin Anticipated Decline

Washington, D.C.–The National Association of Realtors (NAR) had predicted months ago that the surge in home sales in the U.S. would not make it through the summer, and so it has not. The Washington, D.C.-based residential and commercial real estate trade organization’s Pending Home Sales Index (PHSI) recorded a 2.6 percent decline to 75.7 in June from 77.2 in May.

The change in the PHSI from May to June varied widely from region to region. In the Northeast, it dropped 12.2 percent to 58.8, in the Midwest, the PHSI declined 9.5 percent to 64.1 and in the West, the fall was less dramatic, with the index sliding down just 0.2 percent to 85.1. The South, however, proved to be an exception, with the PHSI actually increasing 3.7 percent to 85.8.

Not only did the national PHSI show an average decline from May to June, it showed a downward spiral from June 2009 to June 2010, going from 93.0 to 75.7. “There was an uncharacteristic surge driven by the home buyer tax credit,” NAR spokesperson Walter Molony tells MHN. “We didn’t have a tax credit in place this year. We projected we would see lower sales this summer, and it’s likely to last for another few months.”

There is one factor that could change the anticipated decline, and that is the job market. “We need to see a stronger level of job creation,” Molony says. “You’re going to be hesitant if you are insecure about your job or don’t have a job, so once we see job creation, it will add a greater level of confidence. Right now, we’re in a wait-and-see period.”