Pending Sales of U.S. Existing Homes Rise, Led by Demand in West

Contracts to purchase previously owned U.S. homes increased more than forecast in July, indicating further strength in the housing market, according to figures released Wednesday by the National Association of Realtors in Washington.

Key Points

  • Pending home sales rose 1.3 percent (median forecast was for 0.7 percent gain) after a 0.8 percent decline in June that was previously reported as a 0.2 percent advance
  • Contract signings fell 2.2 percent from July 2015 on an unadjusted basis, the biggest year-over-year drop since November 2014
  • Pending sales index in West jumped 7.3 percent to 108.7, the highest level since June 2013

Big Picture

Americans are taking advantage of mortgage rates that are hovering just above historical lows. The pickup in contract signings indicates demand is holding up after a robust spring sales season, underpinned by steady job creation. Home-price appreciation is settling into a sweet spot -- moderating enough to entice buyers while at the same time giving sellers the green light to put their properties on the market.

Economist Takeaways

“Amidst tight inventory conditions that have lingered the entire summer, contract activity last month was able to pick up at least modestly in a majority of areas,” Lawrence Yun, NAR’s chief economist, said in a statement. “The index in the West last month was the highest in over three years largely because of stronger labor market conditions.”

Other Details

  • Purchase contracts rose 0.8 percent in both the Northeast and South; fell 2.9 percent in the Midwest
  • Sales index climbed to a seasonally adjusted 111.3 from 109.9 in June
  • NAR projects 5.38 million sales of previously owned homes in 2016, up from 5.25 million in 2015 and the highest in a decade