August’s pending-home sales increase 1.6 percent
After last month’s decline, August’s growth reverses the falling numbers from July—climbing to 107.3, a 1.6 percent increase. Year-over-year contract signings also jumped up to 2.5 percent.
NAR chief economist Lawrence Yun is optimistic, stating, “It is very encouraging that buyers are responding to exceptionally low interest rates. The notable sales slump in the West region over recent years appears to be over. Rising demand will reaccelerate home price appreciation in the absence of more supply.”
Growth all around
All four major regions reported pending-home-sales growth in both month-over-month and year-over year contract activity. The Northeast saw a 1.4 percent increase in August, 0.7 percent higher than last year; the Midwest increased 0.6 percent in August, which was 0.2 percent higher than a year prior; the South grew 1.4 percent, a 1.8 percent increase; while the West experienced the highest growth—increasing 3.1 percent in August, an 8.0 percent increase from last year.
Predictions for the year ahead
Yun for sees historically low interest rates affecting future economic growth, particularly homebuying. “With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020,” he explains. “Unfortunately, so far in 2019, new home construction is down 2.0 percent. The hope is that housing starts quickly moving into higher gear to meet the higher demand. Moreover, broader economic growth will strengthen from increased housing activity.”
The National Association of Realtors® predicts home sales to increase 0.6 percent in 2019 and an additional 3.4 percent in 2020, while housing starts are predicted to increase by 2.0 percent in 2019 and 10.6 percent in 2020—raising GDP growth to 2.0 percent in 2020.