Pending home sales returned to positive increases as July was able to make up for the lag seen in the housing market in June.
According to the latest National Association of Realtors Pending Home Sales index, a forward-looking indicator based on contract signings, sales jumped 3.3% to 105.9 in July, up from 102.5 in June, but still down 2.1% from July 2013.
On the other hand, the index is at its highest level since August 2013 and July marks the fourth time the index has increased in the last five months. The index is also above 100, which is considered an average level of contract activity, for the third consecutive month.
Lawrence Yun, NAR chief economist, said favorable housing conditions are behind July’s higher contract activity. “Interest rates are lower than they were a year ago, price growth continues to moderate and total housing inventory is at its highest level since August 2012.
“The increase in the number of new and existing homes for sale is creating less competition and is giving prospective buyers more time to review their options before submitting an offer.”
More importantly, Yun explained that steady job additions to the economy are helping family finances and giving them added confidence to enter the market.
And the growth can be seen across the nation, with all major regions experiencing healthy gains except for the Midwest, which saw a slight decline.
The Northeast escalated 6.2% to 89.2 in July, and is 8.3% above a year ago. In comparison, the Midwest’s index marginally fell 0.4% to 104.6 in July, and is 6.4% below July 2013.
Pending home sales in the South increased 4.2% to an index of 119.0 in July, and is now 1% below a year ago. The index in the West rose 4% in July to 99.5; however, it remains 6% below July 2013.
Looking ahead, Yun said he expects existing-homes sales to be down 2.1% this year to 4.98 million, compared to 5.09 million sales of existing homes in 2013.
The national median existing-home price is projected to grow between 5% and 6% this year and between 4% and 5% next year.