August Pending Home Sales Rise 1.6%

Pending home sales increased in August, which the National Association of Realtors called a welcome rebound after previous declines. Each of the four major regions reported both month-over-month growth and year-over-year gains in contract activity.

The NAR Pending Home Sales Index, a forward-looking indicator based on contract signings, rose by 1.6% to 107.3 in August, reversing the prior month’s decrease. Year-over-year contract signings jumped by 2.5%.

All regional indices improved from July, with the highest gain in the West region, which rose by 3.1% to 96.4 and improved by 8% from a year ago. In the South, pending sales increased by 1.4% to 124.1 in August and improved by 0.2% from a year ago.

In the Northeast, pending sales rose by 1.4% to 94.3 in August and is now 0.7% higher than a year ago. In the Midwest, the index increased by 0.6% to 101.7 in August and improved by 0.2% from a year ago.

“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.”

Yun noted historically low interest rates will affect economic growth, especially home buying, going forward.