After the biggest monthly gain on record last month , pending home sales surged back to pre-pandemic levels, as homebuyers rushed back to the market, taking advantage of record-low mortgage rates.
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 climbed 16.6% from 99.6 in May to 116.1 in June. On a year-over-year basis, sales were 6.3% higher than a year ago.
All four regions saw a double-digit gain in month-over-month contract activity, ranging from 11.7% in the West to 54.4% in the Northeast. Gains in the South sent the index to its record high since 2001. Despite a stunning monthly gain in the Northeast, it was the only region reported a decline in year-over-year pending transactions.
The strong recovery suggests that housing market started to turn the corner after being weakened by the coronavirus pandemic. Meanwhile, boosted by low mortgage rates, homeownership rates increased during the second quarter, especially among households headed by young adults under 35. Though the outlook is promising, rising lumber price are an important limiting factor for adding inventory.