Pending Home Sales Advance for Fifth Straight Month
Pending Home Sales were expected to advance for the fifth straight month in June, but the gain was supposed to be meager. Instead, sales jumped 3.6% in the month, “trashing expectations of a 0.6% gain,” as one analyst put it.
The index hasn’t seen five months of consecutive increases since 2003, providing further confirmation that the real estate market is stabilizing, slashing excess overhang, and preparing for recovery.
Moreover, gains were widespread, with all four regions posting an advance in the month. Sales in the South leapt 7.1%, while the West bumped up 2.9%, the Midwest climbed 0.8%, and in the Northeast sales inched up 0.4%.
“Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines,” commented Lawrence Yun, chief economist at the National Association of Realtors, who publish the survey.
Millan Mulraine, strategist at TD Securities, estimates that 80% of pending home sales are actualized within two months, which “suggests that the upward momentum in U.S. housing market activity may have gathered a bit of steam in June.”
Jennifer Lee from BMO Capital Markets added: “At the risk of being accused of being too optimistic, the bottoming process for the housing market has formed.”
Annually, the level of pending sales is now 9.2% above the level one year ago.
Looking forward, Yun said existing home sales should gradually rise over the year, with conditions varying around the country. “It appears home sales are on a sounder footing and inventory is gradually being absorbed.”
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