The Pending Home Sales Index increased 3.5% in October as the South recovered from the impact of Hurricanes Harvey and Irma. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), remains 0.6% below the level a year ago.
The PHSI jumped 7.4% in the South, and also increased 2.8% in the Midwest and 0.5% in the Northeast, while dropping slightly in the West. Year-over-year, the PHSI increased 2.0% in the South, but decreased in the Midwest, Northeast and West by 0.9%, 1.9% and 4.4% respectively.
NAR reported that sales will continue to severely trail underlying demand as inventory has decreased every month on an annual basis for 29 consecutive months. NAR also suggested that builders are doing their best to ramp up production. New home sales are up almost 9% year-over-year, and single-family starts are up over 8% year-over-year. Builder confidence hit an 8-month high in November, suggesting that job growth, increasing homeownership rates and limited inventory are the right combination to spur continued growth in new residential construction.