Unexpected increase in U.S. home sales in 2023
A report released Thursday by the National Association of Realtors unexpectedly showed a modest increase in U.S. pending home sales .
NAR said its index of pending home sales rose 0.3% to 76.8 in June after falling 2.5% to a revised 76.6 in May.
Economists had expected home sales to fall another 0.5% in June, compared with the 2.7% decline initially reported in the previous month.
Pending home sales increased for the first time since February, but were still down 15.6% from the same month last year.
A pending sale is a sale for which a contract has been signed but has not yet closed. It usually takes four to six weeks to close a deal.
"There hasn't been an economic recovery, but the housing recession is over," said NAR Chief Economist Lawrence Yun, "The abundance of supply suggests that demand for housing is not being met due to a lack of supply. Homebuilders are ramping up production and hiring."
The unexpected one-month increase in pending home sales mainly reflects activity in the Midwest, where sales rose 4.3 percent.
Home sales in the Northeast also rose 0.6%, while sales in the South and West declined 1.4% and 1.0%, respectively.
NAR also projects that the 30-year fixed mortgage rate will reach 6.4% this year and fall to 6.0% in 2024, while the unemployment rate is expected to rise slightly to 3.7% in 2023 before rising to 4.1% in 2024.
"With consumer price inflation close to the Federal Reserve's desired rate, mortgage rates appear to have peaked," Yun said. "Given continued job growth, any significant reduction in mortgage rates could lead to an influx of buyers later this year and next."
NAR also said it expects home sales to fall 12.9 percent to 4.38 million units in 2023 and a sharp increase of 15.5 percent to 5.06 million units in 2024.
Median home prices are expected to fall 0.4% to $384,900 this year and rise 2.6% to $395,000 next year, while housing starts are expected to fall 5.3% in 2023 and rise 5.4% in 2024.
"It is critical to increase supply as much as possible to expand access to home buying for more Americans," Yun said. "Home prices will depend on how much inventory comes on the market."
He added: "Increased home construction will keep prices in check, while limited construction will cause home price growth to outpace income growth."
A separate report released by the Commerce Department on Wednesday showed a marked decline in U.S. new home sales in June.
The Commerce Department said new home sales fell 2.5 percent to 697,000 in June on a year-over-year basis, following a downwardly revised 6.6 percent increase to 715,000 in May.
Economists had expected new home sales to fall 5.0% to 725,000 from the 763,000 originally reported in the previous month.
The downwardly revised new home sales figure for May is still the highest since February 2022 when it hit 773,000.