Pending home sales increased for a fourth consecutive month in August, rising 8.8% to a score of 132.8 on the National Association of Realtors’ Pending Home Sale Index.
Year-over-year, contract signings rose 24.2%.
An index of score of 100 is equal to the level of contract activity in 2001.
“Tremendously low mortgage rates – below 3% – have again helped pending home sales climb in August,” says Lawrence Yun, chief economist for NAR, in a statement. “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.”
“While I did very much expect 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,” Yun adds.
Yun notes that while pending contracts are at an all-time high, that will not necessarily translate to a record number of home sales because not all contracts lead to closings and due to sampling size variations.
He also points out that pending home sales are outperforming many pre-pandemic averages, but says that without matching supply, the recovery will not be sustainable.
“Home prices are heating up fast,” he says. “The low mortgage rates are allowing buyers to secure cheaper mortgages, but many may find it harder to make the required down payment.”