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July’s gains were small, but monthly pending US home sales increased for the sixth time in 2015, according to the National Association of Realtor’s latest index reading.
NAR’s monthly pending home sales index, based on about 20 percent of home transactions, gives an idea of future sales as it tracks cases in which a contract has been signed but the deal has yet to close.
Nationally, the index nudged up to 110.9 in July for a 0.5 percent increase over last month, pulling it to its third highest level this year.
An index level of 100 means contract activity is on par with that seen in 2001, when the index was established.
July’s increase represents a 7.4 percent improvement over the national index from the same time last year and it’s also the 11th straight month the index surpassed numbers seen in the same month in 2014.
“Led by a solid gain in the Northeast, contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer,” said Lawrence Yun, NAR’s chief economist, in a statement.
The Northeast’s July index was 98.8, a 4 percent improvement, while a 0.6 percent increase brought the South’s index up to 124.2. The only region to see the index decline was the west, which dropped 1.4 percent to 103 in July, though it’s still 7.5 percent higher than it was in July 2014. The Midwest saw no change from June and sits once again at 107.8.
Despite the stock market’s volatility in Q3, Yun still expects limited supply to drive up the national median existing-home price by 6.3 percent this year to $221,000. Similarly, he forecasts total existing-home sales in 2015 to hit about 5.29 million, an overall increase of 7.1 percent year-over-year, though he noted that’s still about 25 per cent shy of 2005’s peak of 7.01 million.
“It’s possible some prospective buyers may err on the side of caution and delay decisions,” says Yun, noting the opposite might also happen. “Others may view real estate as a more stable asset in the current environment.”
For now, Yun said the American housing market still has the potential for continued strength.
“The U.S. economy is growing — albeit at a modest pace — and the labor market continues to add jobs.”