Pending home sales increased in September, hitting the fifth highest level over the past year, according to the National Association of Realtors most recent report.
Increases in the South and West outgained the declines in the Northeast and Midwest, according to the report, underpinning the unsteady nature of the current housing recovery. However, there remain several bright spots, according to the trade group's leading economist.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 1.5% to 110 in September, up from August’s downwardly-revised 108.4. The index is 2.4% above last year’s 107.4, and marks the 25th consecutive month of year-over-year increase.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales.
“Buyer demand is holding up impressively well this fall with Realtors reporting much stronger foot traffic compared to a year ago,” NAR Chief Economist Lawrence Yun said. “Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home.”
At 5.47 million, sales are matching their third-highest pace since February 2007’s 5.79 million. Distressed sales fell to the lowest level since NAR first began tracking in October 2008, and first time homebuyers reached 34%, the highest level since July 2012.
In the Northeast, the PHSI fell 1.6% to 96.5, but is still 7.7% above last year. In the Midwest the index declined only slightly at 0.2% to 104.6 in September. This is a decline of 1% from last year.
On the other hand, pending home sales in the South increased 1.9% to 122.1 in September, an increase of 1.7% from last year. The west saw the largest increase at 4.7% from August to 107.3. This is 4% above last year.