WASHINGTON – Pending home sales in July achieved another month of positive contract activity, marking three consecutive months of growth, according to the National Association of Realtors. Each of the four major regions saw gains in both month-over-month and year-over-year pending home sales transactions.
The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, rose 5.9 percent to 122.1 in July. Year-over-year, contract signings rose 15.5 percent. An index of 100 is equal to the level of contract activity in 2001.
“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market,” said Lawrence Yun, NAR’s chief economist. “Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”
Prospective buyers missed most of the spring buying season due to pandemic-induced lockdown measures. With nearly all states at least partially reopened, the market is experiencing robust activity from the pent-up demand. According to Yun, there are no indications that contract activity will wane in the immediate future, particularly in the suburbs.
Yun forecasts existing-home sales to ramp up to 5.8 million in the second half. That expected rebound would bring the full-year level of existing-home sales to 5.4 million, a 1.1 percent gain compared to 2019.
Yun projects existing-home sales to reach 5.86 million in 2021, supported by an economy that he expects to expand by 4 percent and a low-interest rate environment, with the 30-year mortgage rate average of 3.2 percent.
“Anecdotally, Realtors are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem,” Yun said. “If 20 percent more homes were on the market, we would have 20 percent more sales, because demand is that high.” He added that he expects housing starts to average at 1.35 million in 2020 and to pick up in 2021, to 1.43 million.
July Pending Home Sales Regional Breakdown
- All four regional indices recorded increases in contract activity on a month-over-month basis in July.
- The Northeast PHSI grew 25.2 percent to 112.3 in July, a 20.6 percent jump from a year ago. In the Midwest, the index rose 3.3 percent to 114.6 last month, up 15.4 percent from July 2019.
- Pending home sales in the South increased 0.9 percent to an index of 142.0 in July, up 14.9 percent from July 2019. The index in the West rose 6.8 percent in July to 106.4, up 13.2 percent from a year ago.
- The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.