US pending home sales are up 1.6%, the latest figures from the National Association of Realtors (NAR) show.
August 2019’s Pending Home Sales Index (PHSI) rise to 107.3 reversed the previous month’s fall. An index of 100 is equal to the average level of contract activity.
Contract signings in August rose 2.5% year-on-year and the NAR says it is “very encouraging.”
Each of the four major regions in the study, including the South, reported both month-over-month growth and year-over-year gains in contract activity.
NAR chief economist, Lawrence Yun, says, “It is very encouraging that buyers are responding to exceptionally low interest rates. Rising demand will reaccelerate home price appreciation in the absence of more supply.”
Pending home sales in the South increased 1.4% to an index of 124.4 in August, a 1.8% bump from last August.
Mr Yun says historically low interest rates will affect economic growth, especially home buying, going forward.
“With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020. Unfortunately, so far in 2019, new home construction is down 2.0%. The hope is that housing starts quickly move into higher gear to meet the higher demand. Moreover, broader economic growth will strengthen from increased housing activity.”
NAR forecasts home sales to rise 0.6% in 2019 and another 3.4% in 2020. Housing starts are predicted to increase by 2.0% in 2019 and jump an additional 10.6% in 2020. This, in turn, raises GDP to growth of 2.0% in 2020.