June pending home sales tick up 5.3%
Realtors group says index of homes under contract rose in June compared to May, but is still well below June 2007 levels.
NEW YORK (CNNMoney.com) -- The number of pending homes for sale rose in June, a rebound from the previous month, according to a report released Thursday.
The National Association of Realtors' Pending Home Sales Index rose 5.3% in June to 89 from a downwardly revised reading of 84.5 in May.
The index remains 12.3% below its level in June 2007, when it stood at 101.4, but it's at its highest point since October 2007, when it was at 89.9.
The number of homes under contract for sale fell more than expected in May, after a surprising spike in April.
However, this month's report isn't necessarily good news for the average home seller. That's because many of the pending home sales are for foreclosed properties being sold at a steep discount by lenders, according to Mike Larson, a real estate analyst at Weiss Research.
"It's bad news if you're a regular home seller because you're competing against institutions that are willing to undercut you - in some cases, by a large margin," Larson said in a statement.
The report shows that housing markets picked up in every U.S. region.
The pending home sales index for the West coast climbed 4.6% in June. "You're seeing some sort of rebound in California. Not only are sales picking up, but permit numbers are leveling off, meaning we may see a bottom for housing starts in the west," said Patrick Newport, an economist at Global Insight.
In the South, the index jumped 9.3%, while it increased by 3.4% in the Northeast, and by 1.3% in the Midwest.
Home sales may get a boost in 2009 thanks to the government's housing stimulus bill.
"With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009," said Lawrence Yun, NAR chief economist.
Indeed, NAR raised its existing-home sales outlook for 2009 by 7%, saying it now expects sales of 5.51 million next year, up from an expected total of 5.15 million this year.
Additionally, NAR projected that existing home prices will rise by 4.4% in 2009 to $215,800, according to a spokesman.
However, new-home sales in 2009 are forecast to drop 8.8% to $464,000, down from $509,000 this year.
The trade group launched the Pending Home Sales index in 2001, and a reading of 100 is equal to results that first year.
The index is considered a more forward-looking indicator of home sales than the NAR's closely watched existing home sales report. Unlike existing home sales estimates, pending home sales are usually counted a month or two before a closing contract is signed.