June Pending Home Sales showed no negative impact to the rise in mortgage rates and responded instead to lower prices and tax incentives as it rose 3.6% m/o/m, well above estimates of a gain of .7%. It is a measure of contract signings and a precursor to Existing Home Sales (closings). The two areas with the biggest foreclosures, the South and the West, saw the largest gains. Pending sales in the South rose 7.1% m/o/m and 2.9% in the West. Gains in the Northeast and Midwest were modest. Y/o/Y, pending sales are up 9.2%. In June, distressed closings made up about 30% of existing home sales, down from the trend of 45%ish in the prior months. Now, with many foreclosure moratorium’s now over, foreclosure sales may increase. In terms of getting to a bottom and clearing the market, foreclosure sales are the fastest way as bidding wars are being seen in the lower cost homes. Also of influence was the $8,000 tax credit that is expiring soon.
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