Pending home sales surge for a second straight month

U.S. pending home sales increased 17% in June, the second consecutive month of double-digit gains, as low mortgage rates spurred demand for homes.

A seasonally adjusted index measuring signed contracts was 6.3% above the year-ago level after state lockdowns caused by the COVID-19 pandemic pushed transactions into summer months, said Lawrence Yun, chief economist of the National Association of Realtors.

“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,” said Yun. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”

The Fed began buying Treasuries and mortgage-backed securities in March to grease the wheels of the credit markets. That sent interest rates tumbling toward an all-time low reached in mid-July, when the average U.S. fixed rate for a 30-year home loan fell to 2.98%, according to Freddie Mac. It was the first time it broke the 3% threshold in a data series that goes back to 1971.

Sales of existing homes probably will fall by 3% in 2020 to 5.18 million, and sales of new homes likely will rise by 3% to 704,000, Yun said in a forecast he issued in tandem with the home sales report.

The median price of an existing home this year probably will increase 4.3% to $283,600, the forecast said. The median price for a new home likely will gain 1.1% to $324,900, according to the forecast.

Pending home sales in the Northeast region of the U.S. rose 54% in June, the biggest gain in the report. In the Midwest, sales increased 12.2%, in the South the index was up 11.9% and in the West the gain was 11.7%, the report said.

“The Northeast’s strong bounce back comes after a lengthier lockdown, while the South has consistently outperformed the rest of the country,” Yun said. “These remarkable rebounds speak to exceptionally high buyer demand.”

The post Pending home sales surge for a second straight month appeared first on HousingWire.