Oct. 28, 2016
WASHINGTON – Oct. 27, 2016 – Pending home sales shifted higher in September following August's notable dip and are now at their fifth highest level over the past year, according to the National Association of Realtors® (NAR). Increases in the South and West outgained declines in the Northeast and Midwest.
The Pending Home Sales Index, 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 risen year-over-year for 22 of the last 25 months.
A robust increase in the West and a healthy bump in the South pushed pending sales upward in September, says Lawrence Yun, NAR chief economist.
"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."
There are many positive indicators showing the housing market's overall health continues to improve, says Yun reflecting on last week's existing home sales report. 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). And 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," adds 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 Pending Home Sales Index in the Northeast fell 1.6 percent to 96.5 in September, but it's 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 1.0 percent lower year-to-year.
Pending home sales in the South rose 1.9 percent to an index of 122.1 in September; it's 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.
Yun will present NAR's 2017 economic outlook and forecast on Friday, Nov. 4, at the 2016 Realtors Conference & Expo in Orlando, Florida. Dennis Lockhart, president and CEO of the Federal Reserve Bank of Atlanta, will discuss current economic conditions.
© 2016 Florida Realtors®