Pending home sales rise in September
Pending home sales rose in September, marking two consecutive months of increases, according to the National Association of Realtors (NAR).
The Pending Home Sales Index (PHSI, a forward-looking indicator based on contract signings, rose 1.5% to 108.7 in September. Year-over-year contract signings jumped 3.9%. An index of 100 is equal to the level of contract activity in 2001.
Historically low mortgage rates played a significant role in the two straight months of gains, according to Lawrence Yun, the NAR’s chief economist.
“Even though home prices are rising faster than income, national buying power has increased by 6% because of better interest rates,” Yun said. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.”
Regional indices in September were mixed, with the Northeast experiencing the smallest change of the four regions.
The PHSI in the Northeast fell 0.4% to 93.9 in September, but is still 1.3% higher than a year ago. In the Midwest, the index increased 3.1% to 104.4 in September, 2.7% higher than September 2018.
Pending home sales in the South increased 2.6% to an index of 127.5 in September, a 5.7% jump from last September. The index in the West declined 1.3% in September 2019 to 95.1, which is an increase of 3.4% from a year ago.
Pointing to data from active listings at realtor.com, Yun says the upper end of the market is faring well. Fort Wayne, Ind., Rochester, N.Y., Pueblo, Colo., Columbus, Ohio, and Topeka, Kan., saw the largest increase in active listings in September compared to a year ago.
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 said. “But home prices are rising too fast because of insufficient inventory,” he said.
Yun also shared his views on where the future of housing should be heading, in addition to boosting traditional home builder.
“We 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, in order to meet the rising demand for new housing,” he said.
The Pending Home Sales Index (PHSI, a forward-looking indicator based on contract signings, rose 1.5% to 108.7 in September. Year-over-year contract signings jumped 3.9%. An index of 100 is equal to the level of contract activity in 2001.
Historically low mortgage rates played a significant role in the two straight months of gains, according to Lawrence Yun, the NAR’s chief economist.
“Even though home prices are rising faster than income, national buying power has increased by 6% because of better interest rates,” Yun said. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.”
Regional indices in September were mixed, with the Northeast experiencing the smallest change of the four regions.
The PHSI in the Northeast fell 0.4% to 93.9 in September, but is still 1.3% higher than a year ago. In the Midwest, the index increased 3.1% to 104.4 in September, 2.7% higher than September 2018.
Pending home sales in the South increased 2.6% to an index of 127.5 in September, a 5.7% jump from last September. The index in the West declined 1.3% in September 2019 to 95.1, which is an increase of 3.4% from a year ago.
Pointing to data from active listings at realtor.com, Yun says the upper end of the market is faring well. Fort Wayne, Ind., Rochester, N.Y., Pueblo, Colo., Columbus, Ohio, and Topeka, Kan., saw the largest increase in active listings in September compared to a year ago.
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 said. “But home prices are rising too fast because of insufficient inventory,” he said.
Yun also shared his views on where the future of housing should be heading, in addition to boosting traditional home builder.
“We 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, in order to meet the rising demand for new housing,” he said.