Autumn is a busy time for a lot of industries including the housing market as pending home sales grew in September, indicating two consecutive months of increases, according to the National Association of Realtors. The four major regions were split last month, as the Midwest and South recorded gains but the Northeast and West reported declines in month-over-month contract activity, it said in a news release.
The Pending Home Sales Index (PHSI) considered a forward-looking indicator based on contract signings, rose 1.5% to 108.7 in September. Year-over-year contract signings jumped 3.9%. An index of 100 is equal to the level of contract activity in 2001.
Historically low mortgage rates played a significant role in the two straight months of gains, according to Lawrence Yun, NAR’s chief economist.
“Even though home prices are rising faster than income, national buying power has increased by 6% because of better interest rates,” he says in the news release. “Furthermore, we’ve seen increased foot traffic as more buyers are eagerly searching to become homeowners.”
Pointing to data from active listings at realtor.com, Yun says in the news release the upper end of the market is faring well. Fort Wayne, Ind., Rochester, N.Y., Pueblo, Colo., Columbus, Ohio, and Topeka, Kan., saw the largest increase in active listings in September compared to a year ago.
Although contract signings are on the upswing, Yun says the numbers would be even greater if more housing were available.
“Going forward, interest rates will surely not decline in a sizable way, so the changes in the median price will be the key to housing affordability,” he says. “But home prices are rising too fast because of insufficient inventory,” he said.
“In addition to boosting traditional home building, we should explore a greater utilization of modular factory constructed homes, converting old shopping malls or vacant office space into condominiums, permitting more accessory dwelling units, and other supply-increasing actions, to meet the rising demand for new housing,” Yun says.
September Pending Home Sales Regional Breakdown
Regional indices in September were mixed, with the Northeast experiencing the smallest change of the four regions. The PHSI in the Northeast fell 0.4% to 93.9 in September but is still 1.3% higher than a year ago. In the Midwest, the index increased 3.1% to 104.4 in September, 2.7% higher than September 2018.
Pending home sales in the South increased 2.6% to an index of 127.5 in September, a 5.7% jump from last September. The index in the West declined 1.3% in September 2019 to 95.1, which is an increase of 3.4% from a year ago.
If you are in the market to purchase a new home before the holiday season it looks like autumn is a good time to do so. If you can find what you like go ahead and make an offer. You never know, you could be sitting in a new home for the upcoming season with friends and family.
Source: National Association of Realtors