Pending Sales Recover, See Surprise Boost

Pending home sales recovered from an unexpected downturn in June, besting economists’ estimates.

NAR’s Pending Home Sales Index rose by 4.8% month-over-month to a reading of 74.3 last month, jumping after May’s slip to its lowest level on record. An index of 100 is equal to the level of contract activity in 2001.

This is the first increase in three months and a far bigger gain than predicted by economists.

Year-over-year, sales were down 2.6%, compared to May’s -6.6%.

All four regions posted month-over-month increases, though all but the West were also down on an annual basis.

The Northeast saw the fewest signings, which NAR attributes to its particularly tough housing shortage. But in the rest of the country, things are starting to look up for buyers.

“The rise in housing inventory is beginning to lead to more contract signings. Multiple offers are less intense, and buyers are in a more favorable position,” said NAR Chief Economist Lawrence Yun.

“Even more inventory is expected to come onto the housing market in the upcoming months ahead of the normal, seasonal declines in the winter.”

Data from Realtor.com showed prices receding in July, the only decline during the busy summer buying season it has ever recorded.

“As mortgage rates fell in July to their lowest since March on expectations that the Federal Reserve will cut rates as early as September, we suppose some homebuyers may be holding out for lower rates over the next few months,” Realtor.com senior economist Ralph McLaughlin noted.

Buyers may feel more motivated in September when the Central Bank could cut rates. The FOMC held rates steady at its meeting this week, but Wall Street remains convinced a cut is coming next month.

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