WASHINGTON–One day after releasing data showing housing sales were primarily flat in August, a new report from the National Association of Realtors indicates stronger sales months lie ahead.
Pending home sales rose more than expected last month, clocking a 4% jump from July, the NAR said.
Yahoo Finance noted that home contract signings rose more than expected in August, a sign that lower mortgage rates may be pushing some buyers and sellers back into the market.
The Pending Home Sales Index rose 4% in August from a month earlier to 74.7, according to the NAR. Economists expected a much more modest 0.4% gain, Yahoo Finance said.
A level of 100 is equal to contract activity in 2001.
Midwest Leads the Way
The NAR report shows contract signings are up 3.8% from a year ago. Month over month, signings rose in the Midwest, South, and Western U.S., while they declined in the Northeast.
“Homes usually go under contract a month or two before they are sold, and while some deals fall through in the contract period, pending home sales can be an early indication of future sales activity,” Yahoo Finance said. “The housing market is spending its third straight year in a deep slump as mortgage rates stay elevated and prices remain high, leaving many buyers on the sidelines. So far this year, home sales are on track to hit a 30-year low, but there is some hope that falling mortgage rates could spur more activity this fall.”
Slow Decline in Rates
As the CU Daily has been reporting, in recent months, 30-year fixed mortgage rates have been falling. After spending much of the year stuck around 6.7%, rates are now averaging closer to 6.3%, according to Freddie Mac data.
Contract activity is rising fastest in the Midwest, with signings up 8.7% since July and 6.7% in the last year.
