U.S. pending home sales likely to rebound in H2 2018

U.S. pending home sales data for the month of July is set to be released this week. After falling for two straight months, pending home sales had risen 0.9 percent in June. Since pending home sales measure purchase contracts for existing homes, pending sales tend to lead existing sales by one or two months, noted Wells Fargo in a research report. Nevertheless, data released last week indicated that existing home sales dropped 0.7 percent in July, mainly because of tight inventories and raising home prices.

The inventory and affordability story is also widespread in the pending home sales numbers. Low inventories are driving prices higher, which seems to have weakened buyer interest, but might be a sign of more sellers eventually coming to market. Higher interest rates also seem to have had an effect on the housing market. Mortgage rates have risen in the past year, which are adding to the cost of purchasing a home.

“We expect home sales to pick up in the second half of the year, but to finish 2018 at levels slightly lower than last year”, said Wells Fargo.

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