The Pending Home Sales Index picked up 1.5% in September to a seasonally adjusted reading of 110, after the slightly downwardly-revised August low of 108.4, according to a Thursday release from the National Association of Realtors (NAR).
The reading was the first growth after sinking for two straight months and is also up 2.4% compared to the 107.4 index of September 2015. The PHSI, based on signed real estate contracts for existing single-family homes, is a key tool to measure the housing contract activity and to predict existing home sales one or two months ahead.
“Buyer demand is holding up impressively well this fall with Realtors reporting much stronger foot traffic compared to a year ago,” said Lawrence Yun, NAR chief economist, who attributed the performance to strong growth in the job market. “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.”
The PHSI went up in two of four regions. The West witnessed the largest jump month-over-month, at 4.7%, to a score of 107.3, followed by the South, up 1.9%, to 122.1. Pending home sales dipped in the Midwest and Northeast by -0.2% and -1.6%, respectively. But on a yearly basis, the Northwest still secured a 7.7% gain, the largest among all regions.
Yun estimated that existing sales for this year would keep gaining momentum approaching yearend. Sales year to date have matched the the third highest pace (5.47 million) since February 2007, while foreclosures and short sales fell to an eight year low of 4%. In addition, sales to first-time buyers reached 34 percent, the highest share since July 2012.
“The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country,” added the economist. “It’s leading to home prices outpacing wages, properties selling a lot quicker than a year ago and the home search for many prospective buyers being highly competitive and drawn out because of a shortage of listings at affordable prices.”
Read the full release from NAR or watch the NAR video below:
