Pending home sales in the US up 1.5% month on month after falling in August

Pending home sales in the United States increased by 1.5% in September after a significant fall in the previous month and are now at their fifth highest level over the past year.

The latest data from the National Association of Realtors shows that there were increases in the South and West which outgained declines in the Northeast and Midwest.

Overall the NAR pending homes sales index, a forward looking indicator based on contract signings, is now 2.4% higher than last September and has risen year on year for 22 of the last 25 months.

Lawrence Yun, NAR chief economist, says a robust increase in the West and a healthy bump in the South pushed pending sales upward in September. ‘Buyer demand is holding up impressively well,’ he said.

‘Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home,’ he added.

Yun pointed out that there are many positive indicators showing that the housing market’s overall health continues to improve as towards the end of 2016. In addition to sales matching their third highest pace since February 2007, foreclosures and short sales fell to their lowest share since NAR began tracking them in October 2008 to 4%.

Furthermore, sales to first time buyers reached 34% which matched the highest share since July 2012 and was up convincingly from September 2015 when it was 29%.

‘The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country. It’s leading to home prices outpacing wages, properties selling a lot quicker than a year ago and the home search for many prospective buyers being highly competitive and drawn out because of a shortage of listings at affordable prices,’ Yun explained.

A breakdown of the figures show that the index fell by 1.6% in the Northeast but is still 7.7% above a year ago. In the Midwest the index fell modestly by 0.2% and is now 1% lower than September 2015.

Pending home sales in the South rose 1.9% and are now 1.7% higher than last September. The index in the West jumped 4.7% in September and is now 4% above a year ago.