Pending Home Sales Index Hit Record High of 132.8 in August

Washington, DC, September 30, 2020-The Pending Home Sales Index (PHSI) rose 8.8% to 132.8- a record high-in August, according to the National Association of Realtors. Year-over-year, contract signings rose 24.2%. An index of 100 is equal to the level of contract activity in 2001.

"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."

"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."

Yun notes that while pending contracts are at an all-time high, that will not necessarily translate to a record number of home sales because not all contracts lead to closings and due to sampling size variations. He also points out that pending home sales are outperforming many pre-pandemic averages, but says that without matching supply, the recovery will not be sustainable.