The recent weakness in the national housing market has changed, perhaps due to a large drop in mortgage interest rates. One area where we saw this strengthening was in pending home sales. Experts were forecasting pending home sales to increase by 0.5% month over month but saw an even more solid beat, rising 2.8% month over month. Sales were 1.6% higher compared than last year, June 2018, and it also was the first annual gain in 17 months, which was a larger drought than a Rockies playoff berth. Pending homes sales or signed contracts are an indicator of closed home sales one to three months out. Pending home sales are often looked to as a leading indicator of existing-home purchases and a measure of the health of the housing market in the coming months.
Our bullish friend Larry Yun, chief economist for the NAR, had this to say on the beat, “Job growth is doing well, the stock market is near an all-time high and home values are consistently increasing. When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases.”
Mortgage rates continued to fall dramatically during May and June. The average rate on the 30-year fixed mortgage stood at 4.29% on May 1 and ended June at 3.81%, according to Mortgage News Daily.
Regionally, the NAR’s pending home sales index rose 2.7% in the Northeast month over month and was 0.9% higher versus last year. In the Midwest, the index grew 3.3% month over month and 1.7% annually. In the South, it increased by 1.3% month over month and 1.4% annually. In the West, Denver’s home region pending sales jumped 5.4% monthly and were 2.5% higher than a year ago.
DMAR should be releasing their data on July sales soon and we can investigate further if the national trends in existing home sales and pending home sales are showing up in our metro area data. We are also going to check to see if DMAR has addressed the issues with having their historical data changes month to month, and mostly we will issues a monthly and year outlook on single-family home prices. Let us know in the comments if you want any other type of forecast.
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