Pending home sales increased 3.3% in July, climbing four of the last five months. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), increased to 105.9 in July from a downwardly revised June level of 102.5. The July reading was down 2.1% on a year-over-year basis.
The July PHSI increased in the Northeast, South and West by 6.2%, 4.2% and 4.0% respectively, while the Midwest declined slightly by 0.4%. Year-over-year, the Northeast increased 8.3%, while the South, West and Midwest declined 1.0%, 6.0% and 6.4% respectively.
Last week NAR reported a 2.4% increase in July existing home sales, the fourth consecutive monthly increase. The continued positive trend in the July PHSI suggests that the existing home market is healthier and sales will maintain their summer climb into the fall. The growth in household formations and strong pent-up demand will contribute to improved existing sales and new home sales throughout this year.