U.S. Pending Home Sales Spike To Record High In August
Partly reflecting tremendously low mortgage rates, the National Association of Realtors released a report on Wednesday showing pending home sales in the U.S. jumped to a record high in the month of August.
NAR said its pending home sales index spiked by 8.8 percent to 132.8 in August after surging up by 5.9 percent to 122.1 in July. Economists had expected pending home sales to increase by 3.2 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.
“Tremendously low mortgage rates – below 3% – have again helped pending home sales climb in August,” said Lawrence Yun, NAR’s chief economist. “Additionally, the Fed intends to hold short-term fed funds rates near 0% for the foreseeable future, which should in the absence of inflationary pressure keep mortgage rates low, and that will undoubtably aid homebuyers continuing to enter the marketplace.”
He added, “While I did very much expect the housing sector to be stable during the pandemic-induced economic shutdowns, I am pleasantly surprised to see the industry bounce back so strongly and so quickly.”
The much bigger than expected increase in pending home sales came as all four regional indices recorded increases in contract activity on a month-over-month basis in August.
Pending home sales in the West spiked by 13.1 percent, while pending sales jumped by 8.6 percent in both the Midwest and South. The Northeast saw a 4.3 percent surge in pending home sales.