Pending Sales Of Homes Fall More Than Expected

Date: June 30, 2016

May Pending Home Sales Index Declined 3.7%, Realtor Group Says

According to the latest data from the National Association of Realtors, the May Pending Home Sales Index fell 3.7% from April to 110.8. NAR Chief Economist Lawrence Yun in a statement said, “With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity.” He continued, “Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.” Bloomberg News reports that “demand cooled after a robust start to the busiest selling season of the year,” explaining that the “appreciation” of home prices along with limited available properties for sale are putting a damper on total sales, as are the difficulties that first-time buyers or those with low credit and low incomes are facing in finding financing. Yun said, “There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth.”

What This Means For Small Businesses

The housing market has been a source of uncertainty in the years since the recession. As Q2 2016 draws to a close, small businesses in construction and housing, in particular, may continue to face this uncertainty, as the latest data on pending home sales shows, and this is likely to be a drag on small business growth. As NFIB Chief Economist Bill Dunkelberg said in the latest Small Business Economic Trends report, “The bottom line is that without an empowered small business sector, the economy will grow at a mediocre pace. … We should expect the same slow growth for the rest of the year.”

Additional Reading

CNBC also reported on the latest pending home sales data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

Related Content: Small Business News | Economy | National

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