Buckle up, America. The nation's housing market is in for a bumpy ride.
After encouraging news last week that new construction and home prices picked up in June, spirits were high prompting many economists and experts to proclaim the housing market had finally "turned the corner."
But in another turn of events, construction is no longer the needle in the housing market's side. Thanks to tight inventory in many markets around the country, sales of previously owned homes are hurting now, muting gains made in the construction sector.
And things aren't likely to get any better with next month's numbers. According to the National Association of Realtors, pending home sales—a leading indicator of homes sales based on contract signings—slipped almost 1.5 percent in June, on top of downwardly revised figures for May.
Though figures were still higher than those seen a year ago, economists blamed a lack of affordable and desirable homes for sale for the pullback in pending sales month over month.
"Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities," Lawrence Yun, chief economist at NAR, said in a statement Thursday. "We've been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors."
That's bad news for the housing market given that first-time buyers and investors have been the lifeblood of the long-anemic real estate sector post-housing bust.
But in another headscratcher, foreclosures—previously the bane of the housing market--could now be its savior. After seeing more or less steady declines in the number of starts and level of inventory, more than half of the 212 metros tracked by foreclosure information website RealtyTrac saw increased foreclosure activity.
"Those foreclosure starts are welcome news for prospective buyers and real estate brokers in many local markets where a shortage of aggressively priced inventory has been holding up sales activity," Brandon Moore, CEO of RealtyTrac said in a recent statement.
That's why some experts are urging banks and servicers to put more foreclosures on the market to meet demand.
"Any bank-owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand," Yun said.
Meg Handley is a business reporter for U.S. News & World Report. You can reach her at email@example.com and follow her on Twitter.