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.
The Pending Home Sales Index (PHSI), rose 5.9% to 122.1 in July; year-over-year, contract signings rose 15.5%. An index of 100 is equal to the level of contract activity in 2001, NAR says.
“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market,” says 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% 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% and a low interest rate environment, with the 30-year mortgage rate average of 3.2%.
All four regional indices recorded increases in contract activity on a month-over-month basis in July. The Northeast PHSI grew 25.2% to 112.3 in July, a 20.6% jump from a year ago. In the Midwest, the index rose 3.3% to 114.6 last month, up 15.4% from July 2019. Pending home sales in the South increased 0.9% to an index of 142.0 in July, up 14.9% from July 2019. The index in the West rose 6.8% in July to 106.4, up 13.2% from a year ago.