Forecasters expected sales of existing homes to rise in June because the pending home sales index, which measures signed contracts, rose in May. If you consider it takes 1-2 months to close, then there’s your indicator.

But that was not the case.

Sales fell, not by much, down 0.8% month-to-month, surprising even the Realtors, who thought May would be the weakest point. Sales were down 8.8 percent from June of last year, when most closings took place from the end of the home buyer tax credit.

What Realtors and prognosticators did not even consider was a strange phenomenon: June saw a spike in the contract cancellation rate to 16 percent. Existing home cancellation rates usually run under ten percent, and, in fact, in May were at just 4 percent. Cancellation rates for new home construction usually run higher than that, as buyers of newly built homes tend to be more volatile and put less (often nothing) down when signing a contract.

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