U.S. Pending Home Sales Unexpectedly Tumble 1.9% In June

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Pending home sales in the U.S. unexpectedly showed a notable decrease in the month of June, according to a report released by the National Association of Realtors on Thursday.

NAR said its pending home sales index tumbled by 1.9 percent to 112.8 in June after soaring by 8.3 percent to a revised 115.0 in May.

The pullback surprised economists, who had expected pending home sales to edge up by 0.3 percent compared to the 8.0 percent spike originally reported for the previous month.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

"Pending sales have seesawed since January, indicating a turning point for the market," said NAR's chief economist Lawrence Yun. "Buyers are still interested and want to own a home, but record-high home prices are causing some to retreat."

"The moderate slowdown in sales is largely due to the huge spike in home prices," he continued. "The Midwest region offers the most affordable costs for a home and hence that region has seen better sales activity compared to other areas in recent months."

The unexpected drop in pending home sales reflected weakness in the South and West, where pending sales slumped by 3.0 percent and 3.8 percent, respectively.

On the other hand, the report showed pending home sales in the Northeast and Midwest rose by 0.5 percent and 0.6 percent, respectively.

The Commerce Department released a separate report on Monday unexpectedly showing another steep drop in U.S. new home sales in the month of June.

The report said new home sales tumbled by 6.6 percent to an annual rate of 676,000 in June after plunging by 7.8 percent to a revised rate of 724,000 in May.

The continued nosedive surprised economists, who had expected new home sales to jump by 4.0 percent to an annual rate of 800,000 from the 769,000 originally reported for the previous month.

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