The up and down and up and down of housing
Like a good old fashioned yo-yo, pending home sales (contracts signed) have had some minor ups and downs this year. In July, sales rebounded, but fell again in August – would you believe that in September they improved again? Shocker.
According to the National Association of Realtors (NAR), the Pending Home Sales Index (PHSA) rose 1.5 percent in September and is not 2.4 percent higher than September 2015.
For 22 of the last 25 months, the index has improved, and is now at the fifth highest level of 2016.
“Buyer demand is holding up”
Dr. 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,” he said.
“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,” noted Dr. Yun.
2016 should end on a high note
Pointing to last week’s existing home sales report, Dr. Yun says the housing market’s health is improving as we close out the year.
First time buyers hit 34 percent, a welcome sign as newcomers are vital to the overall housing sector. This matches the highest share since July 2012, and is up 5.0 percent from September 2015.
[clickToTweet tweet=”Home sales improve, but the ‘major predicament’ is ‘painfully low’ housing inventory levels” quote=”“The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country,” noted Dr. 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,” Dr. Yun concluded.
PHSI up 4.7 in the West
Contracts signed actually fell in the Northeast by 1.6 percent, but is a robust 7.7 percent higher than last year.
The index was relatively stagnant in the Midwest (down 0.2 percent), and is 1.0 percent below September 2015.
Meanwhile, sales increase 1.9 percent in the South and are 1.7 percent higher than last year.
Finally, in the West, contracts rose 4.7 percent, and is a full 4.0 percent higher than September 2015.