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Pending Home Sales Wane in June

home-for-saleAfter three straight months of increases, pending home sales lost momentum in June, according to the National Association of Realtors (NAR).

NAR's Pending Home Sales Index, an indicator of future home sales based on contract signings, fell to 102.7 last month, down 1.1 percent from May and 7.3 percent from June 2013.

NAR chief economist Lawrence Yun said that while the housing market is stabilizing, ongoing challenges are holding sales back from their full potential.

"Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved," Yun said. "However, 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."

Declines were led in the Northeast, where pending sales fell 2.9 percent month-over-month to an index value of 83.8. Pending home sales were also down in the South, dipping 2.4 percent to an index of 113.8.

Meanwhile, the Midwest's index gained 1.1 percent to 106.6, while the West climbed 0.2 percent to 95.7.

Even with the national decrease, however, Yun notes that June's index remained above the benchmark considered to be an average level of contract activity. Based on current measures, the group expects a minor uptick in sales during the latter half of the year, with a slowdown in home price appreciation and a pickup in inventory driving more activity.

"With rents rising 4 percent annually, potential buyers are less likely to experience sticker shock and can make smart decisions on whether or not it makes sense to buy or continue renting," Yun said.

According to the group, the national median existing-home price for all housing types in June was $223,300, a gain of 4.3 percent over June 2013. It was the slowest annual increase since March 2012. Home prices between 2014 and 2015 are expected to grow between 5 and 6 percent per year.

For all of 2014, NAR forecasts existing-home sales to come to 4.95 million, a 2.8 percent decrease from 2013.

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