The National Association of Realtors (NAR) recently released a pending home sales report recorded in September. From the report, pending home sales pace experienced a minor decline in September after four consecutive months of contracting activity growth. Moreover, all four major U.S. regions showed notable year-over-year growth, while only the Northeast region attained month-over-month gain in pending home sales transactions.
According to the NAR report, the Pending Home Sales Index (PHSI), a forward-looking indicator of pending home sales, dropped 2.2% to 130.0 in September. The same figure represents a 20.5% year-over-year increase in pending home sales.
“The demand for home buying remains super strong, even with a slight monthly pullback in September, and we’re still likely to end the year with more homes sold overall in 2020 than in 2019,” said NAR’s chief economist, Lawrence Yun. “With persistent low mortgage rates and some degree of continuing job recovery, more contract signings are expected in the near future.”
“Additionally, a second-order demand will steadily arise as homeowners who had not considered moving before the pandemic begin to enter the market,” Yun added. “A number of these owners are contemplating moving into larger homes in less densely populated areas in light of new-found work-from-home flexibility.”
In terms of specific regions, three of the four regions recorded a month-over-month decline in contract activity in September. The PHSI for Northwest increased 2% to 119.4 in September, representing a 27.7% year-over-year increase. The Midwest index declined 3.2% to 120.5 in September, representing an 18.5% year-over-year increase. The PHSI for the Southern region dropped 3.0% to 150.1 in September 2020, representing a 19.6% year-over-year growth. Lastly, the West PHSI fell 2.6% to 116.8 in September, representing a 19.3% increase from a year ago.
Even with the increasing housing demand, pending home sales still continue to decline. This could be attributed to the low housing inventory across all the U.S. markets. However, this still remains to be a perfect time to buy real estate. All the market odds are aligned. But we don’t know how long it will remain like this.
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Disclaimer: The views and opinions of Eric Lawrence Frazier are his own and do not necessarily represent First Bank or any organization affiliated with Eric Lawrence Frazier, or the Power Is Now Media Inc. First Bank is an Equal Credit Opportunity Lender. Eric Lawrence Frazier, MBA, is also a Vice President and Mortgage Advisor with First Bank. NMLS#461807 and a California Licensed Real Estate Broker DRE# 01143482. Email: Eric.firstname.lastname@example.org. Ph: 714- 475-8629.
Eric Lawrence Frazier MBA
President and CEO
The Power Is Now Media Inc.