The Pending Home Sales Index, a forward-looking indicator, declined 2.6 percent to 75.7 based on contracts signed in June from an upwardly revised level of 77.7 in May [revised from 77.6], and is 18.6 percent below June 2009 when it was 93.0. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
This decline was expected and suggests existing home sales - reported at closing - will fall sharply in July and probably a little further in August.
NAR chief economist Lawrence Yun says: “Over the short term, inventory will look high relative to home sales."
Yes, the months-of-supply will be in double digits, and that will put downward pressure on prices.
Note: This is a record low for this series that started in 2001.
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