Pending home sales gained ground in September, now at their fifth-highest level over the past year and up from a slip in August, the National Association of REALTORS® reports.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, grew 1.5 percent to 110.0 in September from a slight downward revision of 108.4 in August. With last month’s gain, the index is now 2.4 percent higher than last September (107.4) and has now risen year-over-year for 22 of the last 25 months.
Lawrence Yun, NAR chief economist, says a robust increase in the West and a healthy bump in the South pushed pending sales upward in September.
“Buyer demand is holding up impressively well this fall, with Realtors® reporting much stronger foot traffic compared to a year ago,” Yun says. “Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home.”
According to Yun, there are many positive indicators showing that the housing market’s overall health continues to improve as the end of 2016 nears. In addition to sales matching their third highest pace (5.47 million) since February 2007 (5.79 million), distressed sales—foreclosures and short sales—fell to their lowest share since NAR began tracking them in October 2008 (4 percent). Furthermore, sales to first-time buyers reached 34 percent, which matched the highest share since July 2012 and was up convincingly from September 2015 (29 percent).
“The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country,” says Yun. “It’s leading to home prices outpacing wages, properties selling a lot quicker than a year ago and the home search for many prospective buyers being highly competitive and drawn out because of a shortage of listings at affordable prices.”
The PHSI in the Northeast fell 1.6 percent to 96.5 in September, but is still 7.7 percent above a year ago. In the Midwest the index declined modestly (0.2 percent) to 104.6 in September, and is now 1.0 percent lower than September 2015.
Pending home sales in the South rose 1.9 percent to an index of 122.1 in September, and are now 1.7 percent higher than last September. The index in the West jumped 4.7 percent in September to 107.3, and is now 4.0 percent above a year ago.
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