WASHINGTON – The National Association of Realtors reports on existing home sales in June. The report is scheduled to be released at 10 a.m. EDT Tuesday.
SALES HIGHER: The expectation is that sales increased 2 percent in June to a seasonally adjusted annual rate of 4.99 million, according to a survey by data firm Fact Set.
HOME REBOUND: Sales rose 4.9 percent in May, which was the best monthly gain in nearly three years. But even with that increase, the sales rate of 4.89 million was still 5 percent below the pace of May 2013.
Analysts believe that the housing sector may be starting to regain the momentum it lost after a severe winter and last year's rise in mortgage rates, which cut into the purchasing power for prospective home buyers.
Mortgage rates have come down this year, with 30-year mortgages standing at 4.12 percent last week, according to the Freddie Mac survey.
Yet momentum has been elusive in 2014. Fed Chair Janet Yellen, delivering the central bank's twice-a-year economic report to Congress last week, described housing activity this year as disappointing.
Also last week, the Commerce Department reported that home construction fell in June to the slowest pace in nine months, a setback to hopes that residential activity was picking up speed. All that weakness came from one region, the South, and economists believe heavy rains there may have had a lot to do with the downturn.
After hitting a peak of 5.38 million sales at an annual rate last July, sales of previously owned homes sputtered. Potential buyers have grappled with a limited supply of homes that is driving prices higher. Lending standards have also been tightened in response to the housing boom of the last decade, when financial institutions granted too many mortgages to home buyers who were unable to meet the monthly payments, resulting in millions of foreclosures.
Five years into the recovery from the deep recession that was triggered in part by the collapse in housing, home sales have yet to return to historic averages. Demand remains strong for the most expensive residences but has faltered for starter homes and those priced for middle class buyers.
The pace of home sales has been below the 5.1 million homes sold in 2013 and off the pace of 5.5 million annual sales that would be consistent with a healthy housing market.