Sept. Pending Homes Sales Hit 21-Month High
WASHINGTON– Pending home sales grew in September, marking two consecutive months of increases, according to the National Association of Realtors® (NAR). The four major regions were split, however: the Midwest and South recorded gains but the Northeast and West reported declines in month-to-month contract activity.
The Pending Home Sales Index (PHSI) – a forward-looking indicator based on contract signings – rose 1.5% to 108.7 month-to-month in September. Year-over-year contract signings jumped 3.9%. An index of 100 is equal to the level of contract activity in 2001.
Historically low mortgage rates played a significant role in the two straight months of gains, according to Lawrence Yun, NAR’s chief economist.
“Even though home prices are rising faster than income, national buying power has increased by 6% because of better interest rates,” Yun says. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.”
Yun says the upper end of the market is faring well. Fort Wayne, Ind., Rochester, N.Y., Pueblo, Colo., Columbus, Ohio, and Topeka, Kan., saw the largest increase in active listings in September compared to a year ago.
Although contract signings are on the upswing, Yun says the numbers would be even greater if buyers had a greater number of housing options to consider.
“Going forward, interest rates will surely not decline in a sizable way, so the changes in the median price will be the key to housing affordability,” he says. “But home prices are rising too fast because of insufficient inventory. In addition to boosting traditional home building, we should explore a greater utilization of modular factory constructed homes, converting old shopping malls or vacant office space into condominiums, permitting more accessory dwelling units, and other supply-increasing actions, in order to meet the rising demand for new housing.”
September pending home sales regional breakdown: The Northeast saw the smallest change of the four regions, falling l 0.4% to 93.9 in September, – but pending sales were still 1.3% higher than a year ago. In the Midwest, the index increased 3.1% to 104.4 in September – 2.7% higher than September 2018.
Pending home sales in the South increased 2.6% to an index of 127.5 in September, a 5.7% jump from last September. The index in the West declined 1.3% in September 2019 to 95.1, but it still rose 3.4% from a year ago.
© 2019 Florida Realtors®
Reprinted with permission Florida Realtors. All rights reserved.