Key Highlights
- Pending home sales in US increased +17% in June
- Seasonally adjusted index measuring signed contracts +6.3% compared to one year ago, according to the National Association of REALTORS®
In the midst of a pandemic, US pending home sales continued to increase for the second straight month of double-digit gains. June’s pending home sales surged +17%, an increase of +6.3% compared to one year ago, according to the National Association of REALTORS® (NAR).
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The reason? Two actually…low mortgage interest rates and high demand.
NAR’s chief economist Lawrence Yun was obviously delighted by this just-in data on pending home sales when he said, “It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago. Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”
(We’ve discussed here multiple times how the Fed’s actions of buying Treasuries and mortgage-backed securities to juice the credit markets and keep the economy moving have impacted mortgage rates…according to Freddie Mac, interest rates for a 30-year fixed rate home fell below the 3% threshold to 2.98% in mid-July.)
Regionally, pending home sales in June looked like this:
- Northeast – +54%
- Midwest – +12.2%
- South – +11.9%
- West – +11.7%
Yun said, “The Northeast’s strong bounce back comes after a lengthier lockdown, while the South has consistently outperformed the rest of the country. These remarkable rebounds speak to exceptionally high buyer demand.”
Data from the Mortgage Banker’s Association (MBA) reinforce NAR’s pending sales numbers for June. Though mortgage applications fell slightly (-0.8%) this last week in July, the latest report from the MBA marked ten consecutive weeks of year-over-year increases for purchase activity. Compared to last year’s purchase activity at this time, data reflected a +21% increase.
Last week’s slight back-track indicated that, in the view of Mike Fratantoni, MBA’s senior vice president and chief economist, “…prospective first-time buyers are being impacted more by the rising economic stress caused by the resurgence in C”oVID-19 cases, as well as the uncertainty on how the next round of government support will take shape.”
Thanks to the National Association of REALTORS®, the Mortgage Banker’s Association and HousingWire.
Also read: Mortgage Demand Continues to Amaze & Fed Continues Near Zero Rates, New Single-Family Home Sales Spike in May; Existing Home Sales Plunge, Spring Buying Season Likely to Hold Until Summer – Hopefully
