Pending home sales drop, mortgage rates may have effect
Posted on Tuesday, July 30, 2013 at 10:43:28 AM
Overall, the pulse of the housing market has been strong. In the past year, a lot of positive trends have occurred for the sector, but the higher mortgage rates appear to have taken its toll on the number of homes about to go to closing. Pending home sales are a quality indicator about the future of real estate, and while numbers are down, there is still life for residential financing.
The National Association of Realtors Pending Home Sales Index illustrated the decrease in contract singings, something that may have already been in the works following the recent record highs for the past six years.
A forward-looking indicator, the PHSI dropped to 110.9, barely lower than the 111.3 recorded in May. NAR added that the good news is the figures are still higher than last year's numbers, showing continued improvement for the housing market.
"Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June," said NAR chief economist Lawrence Yun. "The persistent lack of inventory also is contributing to lower contract signings."
Data released by the Commerce Department stated that new residential sales were up in June, more than 8 percent better than May. Not all elements of housing are declining because of mortgage rates, and residential financing can still help a borrower purchase the ideal home.