The Pending Home Sales Index (PHS) ticked up from August to September by 1.5 percent monthly and 3.9 percent year-over-year, according to the latest data from the National Association of Realtors (NAR). The index numbers are up for the second consecutive month.
The PHS indicates housing activity by measuring contract activity based on signed real estate contracts for existing single-family homes, condos and co-ops. Contract signings are up in no small part due to low mortgage rates, NAR Chief Economist Lawrence Yun said.
“Even though home prices are rising faster than income, national buying power has increased by 6 percent because of better interest rates,” Yun said in a statement. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eagerly searching to become homeowners.”
The index varied across different regions of the United States. It fell 0.4 percent month-over-month in the Northeast and 1.3 percent in the West. In the Midwest, the PHS rose 3.1 percent while also growing by 2.6 percent in the South.
Insufficient inventory is a key obstacle, but Yun predicted pending homes sales will further accelerate once more housing becomes available.
“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 added.