Home sales appear poised to reverse their downward trend, as contract signings in each of the four major U.S. regions rose in June, according to the National Association of REALTORS®’ latest Pending Home Sales Index. The West saw the highest increase in contract signings last month, according to NAR’s report.
The index rose 2.8% to a reading of 108.3 in June. Contract signings are now up 1.6% year over year, ending a 17-month streak of annual decreases. NAR Chief Economist Lawrence Yun sees the increase as the likely start of a lasting trend for home sales in the coming months. “Job growth is doing well, the stock market is near an all-time high, and home values are consistently increasing,” Yun says. “When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases.”
Yun says that last month’s uptick in contract signings proves that buyers are showing greater interest in the housing market and its potential for wealth gain. He reiterates the need for home builders to increase construction and add inventory to markets starving for housing. “Homes are selling at a breakneck pace—in less than a month, on average, for existing homes and three months for newly constructed homes,” Yun says. “Furthermore, homeowners’ equity in real estate has doubled over the past six years to now nearly $16 trillion. But the number of potential buyers exceeds the number of homes available. We need to see sizable growth in inventory—particularly entry-level homes—to assure wider access to homeownership.”