August Pending Home Sales at Record High
Pending home sales continue to meet—and exceed—their potential, the National Association of Realtors reported yesterday.
The NAR August Pending Home Sales Index (www.nar.realtor/pending-home-sales), a forward-looking indicator of home sales based on contract signings, rose by 8.8% to 132.8 – a record high. Year-over-year, contract signings rose by 24.2%.
August’s results marked the fourth consecutive monthly increase.
Each of the four major regions experienced growth in month-over-month and year-over-year pending home sales transactions. In the Northeast, the index rose by 4.3% to 117.1 in August and improved by 26% jump from a year ago. In the Midwest, the index rose by 8.6% to 124.5 and improved by 25% from a year ago.
Pending home sales in the South increased by 8.6% to 154.2 in August and improved y 23.6% from a year ago. In the West, the index rose by 13.1% in August to 120.3 and improved by 23.6% from a year ago.
“Pending home sales in August hit a record high with strong monthly and annual gains,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting with the Mortgage Bankers Association. “The 24.2 percent year-over-year jump further reinforced the momentum the housing market experienced this summer, and was in line with the upward swing in MBA’s data since June on purchase mortgage applications.”
Kan said as home buyers continue their search this fall, one headwind remains—the insufficient number of listings for sale. “The competitive purchase market is putting upward pressure on home prices and reducing affordability,” he said. “New construction has picked up significantly, but that pace may not be sustainable given the rise in builder material costs and the upcoming colder winter months. That is why more existing supply is also needed to keep up with demand.”
“Tremendously low mortgage rates – below 3% – have again helped pending home sales climb in August,” said Lawrence Yun, NAR chief economist. “Additionally, the Fed intends to hold short-term fed funds rates near 0% for the foreseeable future, which should in the absence of inflationary pressure keep mortgage rates low, and that will undoubtably aid homebuyers continuing to enter the marketplace.”
Yun added while the housing sector to be stable during the pandemic-induced economic shutdowns, “I am pleasantly surprised to see the industry bounce back so strongly and so quickly.”
