Pending home sales bounce back in August
Pending home sales rebounded in August after falling 2.5% in July, the National Association of Realtors reported today.
The Pending Home Sales Index (PHSI), increased 1.6% to 107.3 in August while year-over-year contract signings rose 2.5%. The PHSI is a forward-looking indicator based on contract signings. An index of 100 is equal to the average level of contract activity.
“It is very encouraging that buyers are responding to exceptionally low interest rates,” said Lawrence Yun, NAR chief economist. “The notable sales slump in the West region over recent years appears to be over. Rising demand will reaccelerate home price appreciation in the absence of more supply.”
All four major regions gained traction from July.
The PHSI in the Northeast rose 1.4% to 94.3 in August and is now 0.7% higher than a year ago. In the Midwest, the index increased 0.6% to 101.7 in August, 0.2% higher than August 2018.
Pending home sales in the South increased 1.4% to an index of 124.4 in August, a 1.8% bump from last August. The index in the West grew 3.1% in August 2019 to 96.4, an increase of 8.0% from a year ago.
Looking forward, Yun pointed to historically low interest rates having an impact on economic growth, especially home buying.
“With interest rates expected to remain low, home sales are forecaste to rise in the coming months and into 2020,” said Yun. “Unfortunately, so far in 2019, new home construction is down 2.0%. The hope is that housing starts quickly move into higher gear to meet the higher demand. Moreover, broader economic growth will strengthen from increased housing activity.”
The NAR said that it expects home sales to rise 0.6% in 2019 and another 3.4% in 2020. Housing starts are predicted to increase by 2.0% in 2019 and jump an additional 10.6% in 2020, which in turn raises GDP to growth at 2.0% in 2020.
The latest PHSI follows yesterday’s new single-family home sales report that saw August sales rise 7.1% to a seasonally adjusted rate of 713,000 from a revised July rate of 666,000.
The Pending Home Sales Index (PHSI), increased 1.6% to 107.3 in August while year-over-year contract signings rose 2.5%. The PHSI is a forward-looking indicator based on contract signings. An index of 100 is equal to the average level of contract activity.
“It is very encouraging that buyers are responding to exceptionally low interest rates,” said Lawrence Yun, NAR chief economist. “The notable sales slump in the West region over recent years appears to be over. Rising demand will reaccelerate home price appreciation in the absence of more supply.”
All four major regions gained traction from July.
The PHSI in the Northeast rose 1.4% to 94.3 in August and is now 0.7% higher than a year ago. In the Midwest, the index increased 0.6% to 101.7 in August, 0.2% higher than August 2018.
Pending home sales in the South increased 1.4% to an index of 124.4 in August, a 1.8% bump from last August. The index in the West grew 3.1% in August 2019 to 96.4, an increase of 8.0% from a year ago.
Looking forward, Yun pointed to historically low interest rates having an impact on economic growth, especially home buying.
“With interest rates expected to remain low, home sales are forecaste to rise in the coming months and into 2020,” said Yun. “Unfortunately, so far in 2019, new home construction is down 2.0%. The hope is that housing starts quickly move into higher gear to meet the higher demand. Moreover, broader economic growth will strengthen from increased housing activity.”
The NAR said that it expects home sales to rise 0.6% in 2019 and another 3.4% in 2020. Housing starts are predicted to increase by 2.0% in 2019 and jump an additional 10.6% in 2020, which in turn raises GDP to growth at 2.0% in 2020.
The latest PHSI follows yesterday’s new single-family home sales report that saw August sales rise 7.1% to a seasonally adjusted rate of 713,000 from a revised July rate of 666,000.