Pending Home Sales Surge For The Second Consecutive Month
Pending home sales continued to climb in June, rising 16.6% monthly since May, and rising 6.3% since June 2019, according to the National Association of Realtors.
The Realtors have also raised their forecast for the housing market because of what they say is an apparent market turnaround.
For 2020, existing home sales are expected to decline by only 3%. New home sales are projected to rise by 3%.
The average rate on the 30-year fixed mortgage at the beginning of June was about 3.24%, and by the end of the month it dipped to around 2.95%, according to Mortgage News Daily. Rates have been hovering near record lows, around 2.9% since then. The Realtors anticipate rates to stay at or near 3% over the next 18 months.
This follows last week’s NAR report showing the sale of existing homes in June rose a stunning 20.7% monthly. That’s the largest monthly gain since the Realtors began tracking the data in 1968. This count is based on closings, and sales were still lower annually, by 11.3%.
One of the biggest issues remains the supply of existing homes for sale, which fell 18% annually in June to just 1.57 million homes, according to NAR. Based on the current sales pace, that represents a four-month supply. Last June 350,000 more homes were on the market. The supply was up just 1% monthly, from May to June. Yun said the price of lumber is hurting the builders.
“While the outlook is promising, sharply rising lumber prices are concerning,” Yun said. “A reduction in tariffs – even if temporary – would help increase homebuilding and thereby spur faster economic growth.”
Regionally, pending home sales rose in all four regions of the United States. In the Northeast sales increased 54.4% monthly and were down only 0.9% from a year ago.
In the Midwest, pending sales rose 12.2% monthly and 5.1% annually. In the South the monthly increase was 11.9% and up 10.3% annually. In the West, pending sales jumped 11.7% monthly and were up 4.7% annually.
“The Northeast’s strong bounce back comes after a lengthier lockdown, while the South has consistently outperformed the rest of the country,” Yun said. “These remarkable rebounds speak to exceptionally high buyer demand.”