U.S. Pending Home Sales Show Modest Pullback Off Six-Year High

(RTTNews) - Pending home sales in the U.S. saw a modest decrease in the month of June, according to a report released by the National Association of Realtors on Monday, with pending sales pulling back off their highest level in over six years.

NAR said its pending home sales index edged down 0.4 percent to 110.9 in June from a downwardly revised 111.3 in May. Economists had been expecting the index to drop by about 1.4 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Despite the monthly decrease, NAR noted that the pending home sales index is 10.9 percent higher than June of 2012, when it was at 100.0.

"Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June," said Lawrence Yun, NAR chief economist. "The persistent lack of inventory also is contributing to lower contract signings."

The drop in pending home sales was partly due to weakness in the West, where pending home sales fell by 3.3 percent in June.

Pending home sales in the South and the Midwest also fell by 2.1 percent and 1.0 percent, respectively, while pending sales in the Northeast came in unchanged.

Last Monday, NAR released a separate report showing an unexpected decrease in existing home sales in June. The report said existing home sales dipped 1.2 percent to an annual rate of 5.08 million in June from a downwardly revised 5.14 million in May.

The drop surprised economists, who had expected existing home sales to climb to 5.27 million from the 5.18 million originally reported for the previous month.

Meanwhile, the Commerce Department released a report last Wednesday showing that new home sales rose by much more than anticipated in the month of June.

The report said new home sales surged up by 8.3 percent to an annual rate of 497,000 in June from the revised May rate of 459,000.

Economists had expected new home sales to climb to an annual rate of 481,000 from the 476,000 originally reported for the previous month.