Pending Home Sales Increased in August

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Driven by low mortgage rates, pending home sales increased 1.6% in August compared with July to reach a score of 107.3 on the National Association of Realtors (NAR) Pending Home Sale Index.

That’s up 2.5% compared with August 2018.

Regionally, and month-over-month, contract signings increased 3.1% in the West,

1.4% in the Northeast, 1.4% in the South and 0.6% in the Midwest.

“It is very encouraging that buyers are responding to exceptionally low interest rates,” says Lawrence Yun, chief economist for NAR, in a statement. “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 predicts that low interest rates will affect economic growth, especially home buying, going forward.

“With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020,” he says. “Unfortunately, so far in 2019, new home construction is down two percent.

“The hope is that housing starts quickly move into higher gear to meet the higher demand,” Yun adds. “Moreover, broader economic growth will strengthen from increased housing activity.”

NAR is forecasting home sales to rise 0.6% in 2019 and another 3.4% in 2020.

Housing starts are predicted to increase 2.0% and jump an additional 10.6% in 2020.

This will help push GDP to growth to 2.0% in 2020, NAR forecasts.

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