Takeaways:
- Home sales are holding steady, according to the National Association of Realtors’ Pending Home Sales Index for July.
- The index marginally increased 0.5 percent to 110.9 in July from an upwardly revised 110.4 in June and is now 7.4 percent above July 2014, NAR said.
- This marks the 11th consecutive month that the index has increased year over year and is this year’s third-highest reading, NAR noted.
Despite the recent volatility of the stock market, the U.S. economy is growing and the job market continues to improve, and home sales are holding steady, according to the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI) for July.
The PHSI, a forward-looking indicator based on contract signings, marginally increased 0.5 percent to 110.9 in July from an upwardly revised 110.4 in June and is now 7.4 percent above July 2014, NAR said.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5 million to 5.5 million, which is considered normal for the current U.S. population.
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This marks the 11th consecutive month that the index has increased year over year and is this year’s third-highest reading, NAR noted.
The PHSI saw solid gains in the Northeast in particular last month, NAR said. The Northeast index increased 4 percent to 98.8 in July, and is now 12.1 percent above a year ago. In the Midwest, the index remained unchanged at 107.8 in July and is now 5.7 percent above July 2014.
Contract activity is likely to hold steady as summer comes to an end, said Lawrence Yun, NAR’s chief economist, but he warned that inventory shortages may persist into the fall, and median existing-home prices may continue to increase.
Yun said he expects the national median existing-home price to increase 6.3 percent in 2015 to $221,400, and total existing-home sales this year may increase 7.1 percent to around 5.29 million, about 25 percent below the prior peak set in 2005.
“In light of the recent volatility in the stock market, it’s possible some prospective buyers may err on the side of caution and delay decisions, while others may view real estate as a more stable asset in the current environment,” Yun said.
“Overall, the prospects for ongoing strength in the housing market remain intact for now. “While demand and sales continue to be stronger than earlier this year, Realtors have reported since the spring that available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust. ”
Expect NAR’s next PHSI update to be released around Sept. 28.
