NAR: Pending Home Sales Climb 2.8% in June
WASHINGTON – Pending home sales continued to rise in June, marking two consecutive months of growth, according to the National Association of Realtors® (NAR). Each of the four major regions recorded a rise in contract activity, with the West seeing the highest surge.
The Pending Home Sales Index (PHSI) – a forward-looking indicator based on contract signings – moved up 2.8% to 108.3 in June, an increase from 105.4 in May. Year-over-year contract signings jumped 1.6%, snapping a 17-month streak of annual decreases.
The 2.8% increase is likely the start of a positive trend for home sales, predicts NAR Chief Economist Lawrence Yun.
“Job growth is doing well, the stock market is near an all-time high and home values are consistently increasing,” says Yun. “When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases.”
The uptick in pending sales suggests that buyers are enthusiastic about the market and of the potential wealth gain via homeownership – but Yun says home builders still need to increase inventory.
“Homes are selling at a breakneck pace, in less than a month, on average, for existing homes and three months for newly constructed homes,” he says. “Furthermore, homeowners’ equity in real estate has doubled over the past six years to now nearly $16 trillion – but the number of potential buyers exceeds the number of homes available. We need to see sizable growth in inventory, particularly of entry-level homes, to assure wider access to homeownership.”
June pending home sales regional breakdown
All regional indices are up from May and from one year ago. The PHSI in the Northeast rose 2.7% to 94.5 in June and is now 0.9% higher than a year ago. In the Midwest, the index grew 3.3% to 103.6 in June – 1.7% greater than June 2018.
Pending home sales in the South increased 1.3% to an index of 125.7 in June – 1.4% higher than last June. The index in the West soared 5.4% in June to 96.8 and increased 2.5% year-over-year.
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