U.S. pending home sales rose 5.9% in July, the third consecutive month of gains, fueled by low mortgage rates and unprecedented demand from consumers.
The seasonally-adjusted index measuring signed contracts was up 15.5% year over year, largely on the back of pent-up demand from buyers who were unable to strike deals during the spring, said Lawrence Yun, chief economist of the National Association of Realtors.
“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market,” said Yun. “Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”
All four regions of the country also saw month-over-month and year-over-year gains in pending home sales.
As states reopen, Yun expects the market to remain hot. There is no indication that contract activity will wane in the immediate future, particularly in the suburbs, Yun said. This sentiment is furthered evidenced by research that an urban exodus is a growing possibility.
Yun forecasts existing home sales to increase to a 5.8 million annualized pace in the second half of 2020. That would bring the full-year total to 5.4 million, a 1.1% gain compared with 2019.
“Anecdotally, Realtors are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem,” Yun said. “If 20% more homes were on the market, we would have 20% more sales, because demand is that high.”
Pending home sales in the Northeast region of the U.S. rose 25.2% in June, the biggest gain in the report. In the Midwest, sales increased 3.3%, in the South the index was up .9% and in the West the gain was 6.8%, the report said.
However, a category 4 hurricane in the Gulf could put some of those deals at risk. A recent report from residential real estate data provider ClosingCorp estimates that 28,000 pending mortgage transactions currently in progress in Texas, Louisiana and Mississippi are in jeopardy as a result of Hurricane Laura. The loans, which are being originated by more than 180 different lenders, have a combined value of more than $6.8 billion, the report said.
