The National Association of Realtors' (NAR) Pending Home Sales Index (PHSI) rose 4.3% to 82.3 based on contracts signed in August from a downwardly revised 78.9 in July, but is 20.1% below August 2009, when it was 103. The data reflect contracts and not closings, which normally occur with a lag time of one or two months.
The latest data are consistent with a gradual improvement in home sales that is predicted for upcoming months, says NAR's chief economist, Lawrence Yun.
"Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market," he says. "However, the pace of a home-sales recovery still depends more on job creation and an accompanying rise in consumer confidence."
Although Yun expects a continuing steady rise in home sales from favorable affordability conditions and some job creation, he cautions that any sudden rise in mortgage rates could slow the recovery.
"[R]ecent rising trends in producer prices at the intermediate and early stages of production, along with very high commodity prices, are raising concerns about future inflation and future mortgage interest rates," he says. "Higher inflation would mean higher mortgage interest rates. In the meantime, housing affordability is hovering near record highs."
The PHSI declined 2.9% to 60.6 in the Northeast, rose 2.1% to 68in the Midwest, increased 6.7 % to 90.8 in the South and rose 6.4% to 101.1in the West.
SOURCE: National Association of Realtors