Pending Home Sales Up 1.5% in September
Washington, DC, October 29, 2019-The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 1.5% to 108.7 in September, according to the National Association of Realtors.
Year-over-year contract signings jumped 3.9%. An index of 100 is equal to the level of contract activity in 2001.
Historically low mortgage rates played a significant role in the two straight months of gains, according to Lawrence Yun, NAR’s chief economist. “Even though home prices are rising faster than income, national buying power has increased by 6% because of better interest rates,” he said. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.”
Pointing to data from active listings at realtor.com, Yun says the upper end of the market is faring well. Fort Wayne, Indiana; Rochester, New York; Pueblo, Colorado; Columbus, Ohio; and Topeka, Kansas saw the largest increase in active listings in September compared to a year ago.
Although contract signings are on the upswing, Yun says the numbers would be even greater if more housing were available. “Going forward, interest rates will surely not decline in a sizable way, so the changes in the median price will be the key to housing affordability,” he said. “But home prices are rising too fast because of insufficient inventory,” he said.
“In addition to boosting traditional home building, we should explore a greater utilization of modular factory constructed homes, converting old shopping malls or vacant office space into condominiums, permitting more accessory dwelling units, and other supply-increasing actions, in order to meet the rising demand for new housing,” Yun said.