Pending home sales increased for a second consecutive month in June, rising 2.8% compared with May to a score of 108.3 on the National Association of Realtors’ (NAR) Pending Home Sales Index.
All four major regions recorded an increase in contract activity. On a month-over-month basis, pending home sales jumped 5.4% in the West, 3.3% in the Midwest, 2.7% in the Northeast and 1.3% in the South.
All four regions were also up year-over-year. June marked the first time in 17 months that pending home sales increased in a year-over-year basis in all four regions.
The overall increase in pending home sales can be attributed to a healthy U.S. economy.
“Job growth is doing well, the stock market is near an all-time high and home values are consistently increasing,” says Lawrence Yun, chief economist for NAR, in a statement. “When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases.”
Yun notes June’s contract signings indicate that buyers are both enthusiastic about the market and of the potential wealth gain, but added that home builders 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,” Yun 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,” he says. “We need to see sizable growth in inventory, particularly of entry-level homes, to assure wider access to homeownership.”