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Pending Home Sales Just Hit a New All-Time High

Pending Home Sales Just Hit a New All-Time High

Sep 30 2020, 9:52AM Mortgage News Daily

Contracts for existing home purchases rose for the fourth straight month in August and more than doubled the increase expected by most analysts. The National Association of Realtors® (NAR) says its Pending Home Sales Index (PHSI) rose from 122.1 in July to 132.8 in August, an increase of 8.8 percent.

The PHSI, based on contracts to purchase existing single-family houses, townhouses, condos, and cooperative apartments, is now at an all time high and is 24.2 percent above its level in August 2019. The index is also up 44.6 points from the point to which it plunged in April after the widespread business closures and stay-at-home responses to the COVID-19 pandemic.

Most analysts had looked for a strong report, but still didn't come close to predicting the actual gains. Those polled by Econoday had looked for an increase between 2.0 and 4.0 percent with a consensus of 3.1 percent. Analysts forecasting for Trading Economics had a consensus increase of 3.4 percent.

"Tremendously low mortgage rates - below 3 percent - 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 percent 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.

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