Pending home sales increased 1.5% in September to reach a score of 108.7 on the National Association of Realtors’ (NAR) Pending Home Sales Index.
Year-over-year, pending home sales jumped 3.9%.
Regionally, and month-over-month, contract signings increased 3.1% in the Midwest and 2.6% in the South, but fell 1.3% in the West and 0.4% in the Northeast.
Low mortgage rates helped spur the increase – however, at the same time, low inventory continued to hold pending home sales back.
“Even though home prices are rising faster than income, national buying power has increased by six percent because of better interest rates,” says Lawrence Yun, chief economist for NAR, in a statement. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.”
September was the second consecutive month that pending home sales increased. They were up 1.6% in August compared with July.
Although contract signings are on the upswing, Yun says the numbers would be even greater if more housing were available.
“Going forward, interest rates will surely not decline in a sizable way, so the changes in the median price will be the key to housing affordability,” he says. “But home prices are rising too fast because of insufficient inventory.”
Yun says to help meet the demand for new housing, builders should “explore a greater utilization of modular factory constructed homes, converting old shopping malls or vacant office space into condominiums, permitting more accessory dwelling units, and other supply-increasing actions.”