Rising home prices and higher mortgage rates are beginning to trim sales expectations at the National Association of Realtors.
The Realtor’s leading indicator of future home sales edged down 0.4% in June after the number of contract signings jumped 5% in May.
“Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June,” NAR chief economist Lawrence Yun said Monday morning with the release of the trade group’s
“The persistent lack of inventory also is contributing to lower contract signings,” Yun said.
NAR’s pending sales index fell to 110.9 in June from 111.3 in May, the highest level since December 2006. The index is up 10.9% from a year ago.
Yun noted that some buyers with firm commitments from their lenders must have balked when it came time to lock-in their mortgage rate. In June, rates jumped above 4.5% to the highest level in two years.
As a result, some contract signings did not translate into actual sales. “Closed sales may edge down a bit in the months ahead, but they’ll stay above year-ago levels,” the Realtors’ chief economist said.
In updating their economic forecast, NAR economists trimmed their estimate for existing home sales for 2013. The new August forecast calls for 5.048 million in existing home sales, compared to 5.067 million sales in the previous month’s estimate.
