The pending home sales index, a forward-looking indicator compiled by the National Association of Realtors, climbed 2.8 percent from May to June. The indicator, which is based on contract signings, jumped 1.6 percent, breaking a 17-month streak of annual decreases.
“Job growth is doing well, the stock market is near an all-time high and home values are consistently increasing,” NAR Chief Economist Lawrence Yun said in a statement. “When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases.”
The pending home sales index was up in every region, with the West seeing the largest gain at 5.4 percent year-over-year.
Yun said the positive increases indicate that prospective buyers are enthusiastic about the market, but builders still need to increase inventory to keep up with demand.
“Homes are selling at a breakneck pace, in less than a month, on average, for existing homes and three months for newly constructed homes,” Yun said. “Furthermore, homeowners’ equity in real estate has doubled over the past six years to now nearly $16 trillion.”
“But the number of potential buyers exceeds the number of homes available,” Yun added. “We need to see sizable growth in inventory, particularly of entry-level homes, to assure wider access to homeownership.”