Pending home sales inched up by 0.6% in August, according to data from the National Association of Realtors (NAR).
The Pending Home Sales Index (PHSI), NAR’s forward-looking indicator of home sales based on contract signings, increased to 70.6 in August; an index of 100 is equal to the level of contract activity in 2001. On a year-over-year measurement, pending transactions were down 3%.
“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August,” said NAR Chief Economist Lawrence Yun. “However, contract signings remain near cyclical lows even as home prices keep marching to new record highs.”
On a regional basis, the Midwest, South and West posted monthly gains in transactions, while the Northeast recorded a loss. Year-over-year, the West registered growth as the Northeast, Midwest and South declined.
“In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months,” Yun added. “Contract signings rose in both the most affordable and most expensive regions – the Midwest and West, respectively – because mortgage rates have fallen nationally.”
Yun also predicted a new wave of housing affordability, stating, “The Federal Reserve does not directly control mortgage rates, but the anticipation of more short-term interest rate cuts has pushed long-term mortgage rates down to near 6% in late September. On a typical $300,000 mortgage, that translates to approximately $300 per month in mortgage payment savings compared to a few months ago.”
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