(Finance Post) Home values increasing along with rising mortgage rates are being blamed for the number of pending home sales for the month of June being lower than the number reported in May. The National Association of Realtors (NAR) said the Pending Home Sales Index (PHSI) dropped slightly by .04 percent to 110.9 in June, which down from May’s revised index of 111.3.
Even though the May totals were revised, they remain to be the highest PHSI on record since Dec. 2006 when the number was 112.8. To see the highest PHSI in almost seven years is significant, experts note. The initial report for May had the number at 112 before the revisions were done. Many experts believed May’s numbers indicated the PHSI was definitely on the rebound and was a strong signal for the housing market.
Although the PHSI dropped from May to June, the index for June is 10.9 percent higher than the June 2012 index, which sat at 100. Designed to reflect home purchase contracts, the PHSI is a leading indicator of home sales for a specific time period. In general, home sales are expected to close and finalize within two months. Since that is not always the case and some transactions may take longer than expected to close, experts believe some sales cancellations during the month of June could have been related to the higher mortgage rates.
Some analysts believe higher home values tied with an increase in interest rates are impacting home affordability. Rates increased in May and June, but have slightly declined since Federal Reserve Chairman Ben Bernanke testified before Congress in mid-July. Others are quick to point out that even with the rising rates, mortgage rates still remain at historic lows.
Mortgage Rates Lower at Week’s Start
The week kicked off on Monday with mortgage rates a tad bit lower according to the national averages. For a 30-year best-execution fixed rate, there was a .04 percent drop to 4.44 percent. A 15-year best execution fixed rate fell .02 percent to 3.64 percent. There remains no change to the FHA 30-year, which stands steady at 4.25 percent.
The Jumbo 30-year note fell .04 percent to 4.51 percent. The only mortgage rate to see an increase was the 5/1 ARM which saw a slight hike of .01 percent, raising to 3.24 percent. Experts do not anticipate significant changes in mortgage rates during the next few days.
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