Pending sales of existing homes rise less than forecast

(Bloomberg News photo by Luke Sharrett).

Contracts to purchase previously owned U.S. homes rose less than forecast in June as a lack of supply and rising prices offset the benefits from historically low mortgage rates, according to figures released Wednesday from the National Association of Realtors in Washington.

Key points:

– Pending home sales gauge rose 0.2 percent after falling 3.7 percent the prior period (median forecast in a Bloomberg survey of economists was 1.2 percent gain).

–Index saw a 0.3 percent rise compared to June 2015 on an unadjusted basis (forecast was 3 percent increase).

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–Pending sales climbed 3.2 percent in the Northeast and 0.8 percent in the Midwest.

Big picture:

The leveling off in pending home sales comes on the heels of reports showing existing-home sales jumped in June to its highest level since 2007 and the strongest new-home demand in eight years. The Realtor’s group said last week that sales have probably peaked for the year as prospective buyers don’t have enough homes from which to choose, forcing up property values. That’s mitigated the positive influence of mortgage rates that are close to record lows. Keep an eye on the pending home sales figure, since buyer traffic has slowed in recent weeks, the real-estate agents’ group said last week.

Economist takeaways:

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“Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale,” NAR chief economist Lawrence Yun said in a statement. “With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets.”

Other details:

–Purchases fell 1.3 percent in the West and 0.6 percent in the South.

–Sales index climbed to 111 seasonally adjusted, compared with 110.8 in May.

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–The gauge in June was at the second-highest level of the year.