REAL ESTATE NEWS...U.S. Pending Home Sales Edged Higher in June

Ongoing job growth and low interest rates continue to support the U.S. housing market

WASHINGTON—A measure of homes under contract for sale rose slightly in June, as ongoing job growth and low interest rates continued to support the U.S. housing market going into the second half of the year.

The National Association of Realtors’ pending home sales index, which tracks contract signings for purchases of previously owned homes, rose a seasonally adjusted 0.2% in June from the prior month, the trade group said Wednesday. Sales then typically close within a month or two of the signing.

Economists surveyed by The Wall Street Journal had expected a larger rise of 1.8%, following May’s drop of 3.7%.

The index stood at 111.0 in June, from May’s reading of 110.8. Compared with June 2015, the index has risen 1.0%.

June’s reading was still the second-highest in the past 12 months, and a notch above the 2015 average of 108.9. But it was noticeably lower than 2016’s high of 115.0, reached in April. And in May, the measure posted its first year-over-year decline since August 2014.

Lawrence Yun, NAR’s chief economist, said the weak June gain reflected a “slight, early summer cool-down after a very active spring.”

News Corp., owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.

Pending sales were mixed in June across the country. A 3.2% monthly rise in the Northeast gave the overall index a boost, helped by a smaller rise in the Midwest. The index fell in June in the West and the South from the prior month. On an annual basis, pending sales in June were 1.6% to 1.8% higher than in June 2015 in every region except the West, where they were down by a similar magnitude.

The U.S. housing market has been posting steady gains in recent years, helping boost overall economic growth. But the ongoing strength of home sales has some industry observers worried that shrinking inventory and rising prices will weigh on further gains going forward.

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In June, sales of existing homes rose to their strongest pace in nearly a decade, NAR said last week. At that pace of sales, there were 4.6 months’ worth of existing homes on the market last month, down from five months’ worth in June of 2015, according to NAR. New home sales, which account for about 10% of the market, were up about 10% in the first six months of 2016 over the same period a year ago, the Commerce Department said Tuesday.

Job growth has been slowing in 2016 compared with the prior year, another potential headwind for the housing market, although wage growth is starting to pick up. But interest rates, another key factor supporting home purchases, continue to hover near historically low levels. The average rate on a 30-year fixed-rate mortgage in June was 3.57%, down from 3.87% in January, according to Freddie Mac.

In June testimony to Congress, Federal Reserve Chairwoman Janet Yellen noted that “housing has continued to recover gradually, aided by income gains and the very low level of mortgage rates.”

On Wednesday afternoon, Fed officials will conclude a two-day meeting in which they are discussing the state of the economy and monetary policy.