June pending home sales jump 5.3%
* Pendings climbed 5.3% in June. That was well ahead of forecasts for a 1% drop. May's reading was revised to -4.9% from -4.7%.
* Regionally, June was the polar opposite of May. Pending sales dropped in all four regions in May; They rose in all four regions in June. June pendings were up 1.3% in the Midwest, 3.4% in the Northeast, 4.6% in the West, and 9.3% in the South.
* The index level was 89 in June, down 12.2% from the year-earlier reading of 101.4 but up from the cycle low of 83, set in March.
Pending sales put in a strong showing in June, with gains in all four regions of the country. That's encouraging on its face. But there are some caveats to consider here.
For one thing, distressed inventory is accounting for a larger percentage of sales in many markets. Lenders are getting more aggressive when it comes to unloading foreclosed property, and that's attracting some bargain hunters. That's good if you want to start reducing the amount of inventory on the market. But it's bad news if you're a regular home seller because you're competing against institutions that are willing to undercut you -- in some cases, by a large margin.
For another, this data covers PENDING rather than CLOSED sales. Tighter mortgage standards and rising home loan rates will likely prevent more of today's hopeful buyers from actually closing deals.
To whit: 30-year fixed mortgage rates -- at 6.52% -- are close to a six-year high. And the Federal Reserve's survey on bank lending standards from earlier this year showed tightening across the board. Some 77.7% of banks are tightening standards on subprime mortgage loans ... 75.6% are making it tougher to get mid-grade Alt-A and “nontraditional” mortgages ... and 62.3% are tightening standards on prime loans, the most since the Fed started its quarterly survey 18 years ago.