Pending Home Sales Increased 0.6% in August

Pending Home Sales

According to the National Association of Realtors, pending home sales saw a 0.6% increase in August. While transactions grew in the Midwest, South, and West, the Northeast experienced a decline. Year-over-year, the West showed growth, but the Northeast, Midwest, and South all reported decreases.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, climbed to 70.6 in August, though pending transactions were down 3.0% compared to the previous year. An index level of 100 represents contract activity from 2001.

“A slight uptick indicates a modest improvement in housing affordability, mainly due to mortgage rates falling to 6.5% in August,” stated NAR Chief Economist Lawrence Yun. “However, contract signings remain near cyclical lows, even as home prices reach new record highs.”

Regional Breakdown of Pending Home Sales

The Northeast PHSI fell 4.6% from July to 61.6, reflecting a 2.2% decrease from August 2023. The Midwest index rose 3.2% to 70.0, down 3.6% year-over-year.

In the South, the PHSI increased by 0.1% to 83.6, a drop of 5.3% from the previous year. The West saw a 3.2% rise in August to 58.0, marking a 2.7% increase compared to August 2023.

“Overall, the New England region has performed relatively better in terms of home sales and prices in recent months,” Yun noted. “Contract signings rose in both the most affordable and the most expensive regions—the Midwest and West—thanks to a national decline in mortgage rates. Housing affordability is likely to see significant improvements.”

“While the Federal Reserve doesn’t directly control mortgage rates, expectations of upcoming short-term interest rate cuts have driven long-term mortgage rates down to around 6% by late September,” Yun added. “For a typical $300,000 mortgage, this change can lead to savings of approximately $300 per month in mortgage payments compared to a few months ago.”

Source: National Association of Realtors® (NAR)