Tyler Durden: Following new home sales disappointment, pending home sales dropped 1.8% in June (missing expectations of a 0.9% rise) for the biggest drop since Dec 2013.
After 5 months of gains, and with median prices at record highs, it appears affordability is crushing hopes of any sustained ‘recovery’ once again.
Modest gains in the Northeast and West were offset by larger declines in the Midwest and South, but Larry Yun has an explanation, hold-out buyers are waiting for a better entry point (in other words – pent up demand is there).
Lawrence Yun, NAR chief economist, says although pending sales decreased in June, the overall trend in recent months supports a solid pace of home sales this summer.
“Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers’ comfort level,”he said.
“The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows.”
“Strong price appreciation and an improving economy is finally giving some homeowners the incentive and financial capability to sell and trade up or down,” adds Yun.
“Unfortunately, because nearly all of these sellers are likely buying another home, there isn’t a net increase in inventory.
A combination of homebuilders ramping up construction and even more homeowners listing their properties on the market is needed to tame price growth and give all buyers more options.”
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But it’s not the dismal reality of the underlying economy and the sudden disappearance of the manic Chinese buyer.
This article is brought to you courtesy of Tyler Durden From Zero Hedge.