U.S. Pending Home Sales Spike More Than Expected In June
After reporting a substantial rebound in pending home sales in the U.S. in the previous month, the National Association of Realtors released a report on Wednesday showing another significant increase in pending home sales in the month of June.
NAR said its pending home sales index surged up by 16.6 percent to 116.1 in June after skyrocketing by 44.3 percent to 99.6 in May. Economists had expected pending home sales to jump by 15.0 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
With the continued increase in contract activity, pending home sales in June were up by 6.3 percent compared to the same month a year ago.
“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” said NAR chief economist Lawrence Yun.
He added, “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”
As a result of the apparent housing market turnaround, NAR has raised its forecast for the housing market in 2020.
NAR now expects existing home sales to decline by only 3 percent in 2020, with sales ramping up to 5.6 million by the fourth quarter. New home sales are projected to jump by 3 percent.
The sharp increase in pending home sales in June reflected growth in all four major regions, with the Northeast leading the way higher with a 54.4 percent spike in pending sales.
Pending home sales in the Midwest also soared by 12.2 percent, while pending sales in the South and West surged up by 11.9 percent and 11.7 percent, respectively.
“The Northeast’s strong bounce back comes after a lengthier lockdown, while the South has consistently outperformed the rest of the country,” Yun said. “These remarkable rebounds speak to exceptionally high buyer demand.”