Following the June increase in existing inventory, the Pending Home Sales Index increased 0.9% in May, but remains 2.5 % below the level one year ago. The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR). The PHSI increased to 106.9 in June from 105.9 in May.
The PHSI increased slightly in all four regions, ranging from 1.4% in the Northeast to 0.5% in the Midwest. Year-over-year, the PHSI remained down, ranging from 0.3% in the South to 5.6% in the West.
Based on the June increase in the inventory of homes for sale, NAR suggested the possibility that the worst of the supply crunch has passed. Despite the 5.3% decline in new home sales in June, builder confidence stayed at a healthy level in July. The accelerating economic growth in the second quarter of 2018 fueled the job market, and the demand for new residential construction will continue to grow.