The Pending Home Sales Index (PHSI) rose 5.9 percent to 122.1 in July. Year-over-year, contract signings rose 15.5 percent. An index of 100 is equal to the level of contract activity in 2001.
“We are witnessing a true V-shaped sales recovery, as homebuyers continue their strong return to the housing market,” NAR Chief Economist Lawrence Yun said in a news release. “Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”
Prospective buyers missed most of the spring buying season because of pandemic-induced lockdown measures. With nearly all states at least partially reopened, the market is experiencing robust activity from the pent-up demand. According to Yun, there are no indications that contract activity will wane in the immediate future, particularly in the suburbs.
Yun forecasts existing-home sales to ramp up to 5.8 million in the second half. That expected rebound would bring the full-year level of existing-home sales to 5.4 million, a 1.1 percent gain compared with 2019.
Yun projected existing-home sales to reach 5.86 million in 2021, supported by an economy that he expects to expand by 4 percent and a low-interest-rate environment, with the 30-year mortgage rate average of 3.2 percent
“Anecdotally, Realtors are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem,” Yun added. “If 20 percent more homes were on the market, we would have 20 percent more sales, because demand is that high.”
He added that he expects housing starts to average at 1.35 million in 2020 and to pick up in 2021, to 1.43 million.