Building on upward momentum from June, pending home sales rose 0.9 percent in July even as analysts expressed doubt the rally would last, according to new National Association of Realtors data.
No one can predict the future, but you can prepare. Find out what to prepare for and pick up the tools you’ll need at the immersive Virtual Inman Connect on Nov. 1-2, 2023. And don’t miss Inman Connect New York on Jan. 23-25, 2024, where AI, capital, and more will be center stage. Bet big on the roaring future, and join us at Connect.
Pending home sales increased for the second-consecutive month in July, hinting at rise demand as the economy shows signs of improvement, according to data released Wednesday by the National Association of Realtors.
Pending home sales increased 0.9 percent in July, 14 percent lower than a year ago. July marked the second-straight month of pending sales increases after inching up 0.3 percent in June, the first uptick in four months.
The two months of gains in pending purchases suggests the potential for housing market activity ticking up despite still-high mortgage rates and low inventory, according to NAR.
“The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home buying offers,” NAR Chief Economist Lawrence Yun said in a statement.
The gains can largely be attributed to the economy doing well, according to Yun.
“Jobs are being added and, thereby, enlarging the pool of prospective home buyers. However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many,” he said.
Pending sales differed across the country with the Pending Home Sales Index rising 2 percent month over month in the South and 6.2 percent month over month in the West, while declining 5.8 percent in the Northeast and 0.4 percent in the Midwest, according to the NAR.
The increase in activity in the West is likely attributable to a decrease in prices over the past year, driving more buyers back into the market, according to Yun.
“Interestingly, the West region experienced a meaningful price decline in the past year and buyers are quickly returning as a result,” he said.
Other experts expressed more skepticism that July’s increases carried any real significance for housing market activity moving forward.
While two consecutive months of increases could seem to mean the housing market’s finally getting moving, that’s a tough argument to make,” Kate Wood, a home and mortgage expert at the personal finance website NerdWallet said in a statement.
Wood pointed to the median existing home price crawling north of $400,000 during July while mortgage rates went above 7 percent, furthering affordability challenges for buyers.
“These significant affordability challenges, as well as a continued dearth of inventory, lower the likelihood that pending sales will continue to grow,” she said.
Email Ben Verde