Homebuilders Sink On Lower June Pending Sales Index
Homebuilder's stocks sank early Monday on news that pending home sales slowed in June following three consecutive monthly gains.
The month's so-called Pending Home Sales Index fell 1.1 percent from May, and is 7.3 percent lower than a year earlier, according to the National Association of Realtors.
Leading the decline in home stocks was M/I Homes, (NYSE: MHO) off 2.2 percent to $21.02. Two exchange-traded funds tied to the industry also fell more than 1.5 percent; SPDR S&P Homebuilders (NYSE: XHB) and iShares U.S. Home Construction (NYSE: ITB).
The pending sales news compares with an 8.1 percent decline in new home sales in June from May, as reported last Thursday by the U.S. Commerce Department.
The real estate agents' economist Lawrence Yun predicts a 2.8 percent decline in existing home sales for 2014, to 4.95 million units, compared with 5.1 million sales of existing homes in 2013.
The national median existing-home price will grow between five and six percent this year and in 2015, according to Yun.
“Supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers," Yun said in a statement.
Regionally, pending home sales fell 2.9 percent in the Northeast in June, and is 3.2 percent below a year ago. In the Midwest, pending sales rose 1.1 percent to 106.6, but remains 5.5 percent below June 2013, Yun's group said.
Pending home sales in the South dipped 2.4 percent in June, and is 4.3 percent below a year ago. The index in the West was flat, but remains 16.7 percent below June 2013.
The median existing-home price for all housing types in June was $223,300, which is 4.3 percent above June 2013. This is the slowest increase since the 3.1 growth in March 2012, the group said.
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