Pending homes sales are up strongly in the south of the United States.
National sales also rose, according to the National Association of Realtors (NAR) data.
The Pending Home Sales Index (PHSI) is a forward-looking indicator based on contract signings.
Pending homes sales are up strongly in the south by 2.6%
Pending home sales in the South increased 2.6% to an index of 127.5 in September. That is a 5.7% jump from last September.
Nationally, the PHSI rose 1.5% to 108.7 in September, while 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. Lawrence Yun, NAR’s chief economist, says “Even though home prices are rising faster than income, national buying power has increased by 6% because of better interest rates. Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.”
The numbers would be even more impressive 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. “But home prices are rising too fast because of insufficient inventory,” he said.
The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed. The sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined.