It has been six months of encouraging growth in the real estate industry marked by increased sales and greater confidence in buying and selling properties. But now there are indications of consumer hesitation and topping the list is a slip in pending home sales.
This week the Pending Home Sales Index, based on the number of signed contracts, moved slightly down by .4 percent to an index number of 110.9 in June 111.3 in May, according to the National Association of Realtors. The research group said pending sales are above what was recorded for the same period last year and that the “pace in May was the highest since December 2006 when it reached 112.8.”
NAR’s Chief Economist Lawrence Yun said the reason for this slight decrease is that not all contracts move forward to an actual home closing.
“There are some homebuyers who sign contracts with strong lender commitment letters, but have floating mortgage interest rates. Those rates can be locked as late as 10 to 14 days before closing, so some homebuyers may change their minds if the rate rises too much, which apparently happened with some sales scheduled to close in June,” he said in a press release. “Closed sales may edge down a bit in the months ahead, but they’ll stay above year-ago levels.”
And another indicator of market caution is the borrowing rates.
The Mortgage Bankers Association reports that applications for new mortgages went down 2.6 percent in mid July and another 1.2 percent in the week ending July 24.
The mortgage rate for the week ending July 24 is 4.54 percent on 30-year fixed, 3.61 percent on a 15-year fixed and 3.54 percent on a 5-year Adjustable Rate Mortgage.
And refinancing has dropped to its lowest level since the summer of 2011.
(Photo above of a pending sale in Purchase. Barbara Livingston Nackman/The Journal News)