According to the analytic report, the NAR’s pending home sales index slipped by 1.1 percent last month, falling to 102.7. This decline was a bit more significant than the 0.8 percent decline previously forecasted by market analysts, and came right after a 6 percent increase in May that drove the index above the 100 threshold. However, since 100 represents an average month for pending home sales, the metric remains slightly above average.
Analysts believe that the NAR’s new data may not be enough to provide clearer signals as to whether the U.S. housing recovery is pointing towards the right direction. “The data will keep open the debate over whether the recovery in housing is getting back on track,” posited High Frequency Economics chief U.S. economist James O’Sullivan. “We believe it is, but reports are clearly still mixed.”
Further, NAR chief economist Lawrence Yun opined that the housing market is still encountering a lot of headwinds that are preventing a full-blown recovery. “Supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates,” he postulated.
Despite the previous month’s decline in pending home sales, Yun believes that the pending home sales index may enjoy “a slight uptick” in the second half of 2014, as housing supply improves and price increases begin to slow down in contrast. And for calendar 2014, Yun expects existing home sales to slip by 2.8 percent to 4.95 million, down from the previous calendar year’s 5.1 million.