With the help of lower mortgage rates, pending home sales continued to grow in June.
The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI rose 2.8% from 105.4 in May to 108.3 in June. On a year-over-year basis, sales were 1.6% higher than a year ago, the first year-over-year gain in 17 months.
Regionally, the June PHSI climbed in all four regions, ranging from an increase of 1.3% in the South to 5.4% in the West. Year-over-year, the PHSI in the Northeast, Midwest, South and West increased 0.9%, 1.7%, 1.4% and 2.5%, respectively.
Lower mortgage rates and solid job growth are the major drivers of June gains and NAR expects sales will continue to grow in the coming months. Despite the current favorable conditions and slowed home price gains, a sizeable growth in inventory is still needed, particularly of entry-level homes, to increase access to homeownership.