A rebound in contract signings for the purchase of previously owned homes shows housing demand is stabilizing after a three-month downturn, National Association of Realtors figures released Monday showed.
The index rose 1.5% (the estimate was a 1% advance) after a 0.7% drop. The gauge climbed 0.7% from June 2016 on unadjusted basis.
The increase puts the group’s gauge in line with its average since the start of 2016 and shows growth in the residential real estate market is being sustained while contributing little to the economy. Housing remains driven by trade-up purchasers who have taken advantage of low mortgage rates and are taking in stride higher asking prices. Limited choices of cheaper properties, however, are hindering entry-level buyers.
June saw a decline in sales to investors and those paying cash, according to the NAR. Less competition from investors may help alleviate the tight supply issue, which is good news for first-time buyers.
“Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria,” Lawrence Yun, NAR’s chief economist, said in a statement.
“Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1% lower than a year ago.”
Purchase contracts increased 2.9% in the West from a month earlier and climbed 2.1% in the South.
Thirteen percent of sales went to investors, the smallest share this year. All-cash transactions accounted for 18% of signings, the smallest share since June 2009. Yun forecasts 5.56 million existing homes will be sold this year, up 2.6% from 2016.
