Pending home sales rise in June
After a long drought, the NAR anticipates a growth streak for home sales.
For the second consecutive month, pending home sales are on the rise, according to the National Association of Realtors. All four major regions generated increases.
The Pending Home Sales Index increased 2.8% to 108.3 in June, up from 105.4 in May. Also, year over year contract signings jumped 1.6%, snapping a 17-month streak of annual declines.
Pending home sales are defined as sales where the contract has been signed but the transaction has not closed. These sales usually close within one or two months of the signing.
Lawrence Yun, NAR chief economist, said the 2.8% increase can be attributed to the current favorable conditions and predicted the rise is likely the start of a positive trend for home sales. “Job growth is doing well, the stock market is near an all-time high and home values are consistently increasing. When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases,” he said.
Yun notes June’s contract signings indicate that buyers are both enthusiastic about the market and of the potential wealth gain, but he 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,” he said. “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. We need to see sizable growth in inventory, particularly of entry-level homes, to assure wider access to homeownership.”
On a year-over-year basis, the West showed the largest gain – up 2.5%. The Midwest was up 1.7%; the South was up 1.4%; and the Northeast gained 0.9%.
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