Pending home sales grew for the second-consecutive month in June, as the National Association of Realtors (NAR) announced the Pending Home Sales Index rose 2.8%, and year-over-year contract signings increased 1.6%.
Lawrence Yun, Chief Economist at NAR, said favorable conditions aided to the increase, and that this is a good sign moving forward.
“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,” Yun said.
Additionally, Yun said June’s increase in contract signings—breaking a 17-month streak of decreases—indicates that buyers are both enthusiastic about the market and the possible wealth gain, but noted inventory needs to increase.
“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.”
The NAR also reported that every region in the nation saw an increase from May and 2018. The midwest rose 3.3%, followed by the northeast’s increase of 2.7%. Pending home sales in the south grew by 1.3% in June, and the west saw a jump of 5.4%.
This report comes days after CoreLogic’s latest Case-Shiller U.S. National Home Price Index (HPI) revealed home prices rose 3.4% in May, which is a slight decrease from the 3.5% growth the month prior.
“Growth in home prices, as measured by the Case-Shiller HPI, began to stabilize in May. The more than 100 basis point decrease in mortgage rates since November has revived home sales and given buyers additional purchasing power in the market,” said Tian Liu, Chief Economist at Genworth Mortgage Insurance. “That extra purchasing power is beginning to show up in home prices.”
The 10-city composite annual increase came in at 2.2%, which is a slight decrease from 2.3% in the previous month.