Highest Home Sales Since 2005. Can It Last?
July marked the third consecutive outsized increase in the Pending Home Sales Index (PHSI) produced by the National Association of Realtors® (NAR) It also was the third of three July sales measures to surprise analysts. NAR said the PHSI, a leading indicator of home sales based on newly signed purchase agreements, rose 5.9 percent from 116.1 in June to 122.1.
The increase in the PHSI was the smallest gain among the home sales indicators. New home sales rose 13.9 percent in July and new home sales soared 24.7 percent. Nonetheless, the performance is impressive given that the index has more than recovered from the 88.2 level to which it plunged in April as the nation shut down in response to the outbreak of coronavirus.
The July gain, which put the index up 15.5 percent compared to a year earlier, bodes well for existing home sales in August and September. Pending sales are generally expected to close within one to two months of contract signing.
"We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market," said Lawrence Yun, NAR's chief economist. "Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings."NAR said the strong summer sales are an indication that the pandemic merely delayed rather than obliterated the "spring market." With most of the states that shut down now reopened, the market is benefiting from the pent-up demand. Yun says there are no indications that contract activity will wane in the immediate future, particularly in the suburbs. Jann Swanson Mortgage News Daily Aug 27, 2020