The nation’s healthy economic environment drove an increase in pending home sales, pushing the index forward 2.8% in June, according to the latest report from the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased to 108.3 in June, rising from May’s 105.4.
Contract signings compared to a year earlier grew 1.6%, ending a 17-month streak of annual declines, NAR said.
Additionally, the index revealed that activity in all four major regions improved as the PHSI in the Northeast, South, Midwest and West rose year over year.
These are the PHSI changes for each region:
- Northeast: Increased 2.7 % to 94.5 and is 0.9% higher than June 2018
- Midwest: Increased 3.3% to 103.6 and is 1.7% higher than June 2018
- South: Increased 1.3% to 125.7 and is 1.4% higher than June 2018
- West: Increased 5.4% to 96.8 and is 2.5% higher than June 2018
NAR’s Chief Economist Lawrence Yun said June’s 2.8% increase can be attributed to the nation’s current favorable conditions and predicted last month’s 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,” Yun said. “When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases.”
However, Yun noted that although June’s contract signings indicate that while buyers are both enthusiastic about the market and of the potential wealth gain, homebuilders still need to increase inventory production.
“Homes are selling at a breakneck pace, in less than a month, on average, for existing homes and three months for newly constructed homes,” Yun 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.”