Pending home sales continued to ascend in June, marking two consecutive months of growth, according to the National Association of Realtors®. Each of the four major regions recorded a rise in contract activity, with the West experiencing the highest surge.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, moved up 2.8% to 108.3 in June, up from 105.4 in May. Year-over-year contract signings jumped 1.6%, snapping a 17-month streak of annual decreases.
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.”
June Pending Home Sales Regional Breakdown
All regional indices are up from May and from one year ago. The PHSI in the Northeast rose 2.7% to 94.5 in June and is now 0.9% higher than a year ago. In the Midwest, the index grew 3.3% to 103.6 in June, 1.7% greater than June 2018.
Pending home sales in the South increased 1.3% to an index of 125.7 in June, which is 1.4% higher than last June. The index in the West soared 5.4% in June to 96.8 and increased 2.5% above a year ago.