Recent national data shows that pending home sales increased for a third straight month in July as record-low mortgage rates continue to fuel housing demand.
The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose 5.9% from June to July. On a year over-year basis, sales were 15.5% higher than a year ago, the largest gain since early 2014.
The V-shape sales recovery is further evidence that the housing market is leading a post-COVID economic recovery. Though both existing home sales and new home sales hit new record highs in August, home inventory remains lean and home prices continue to grow. This may put home ownership out of reach for some buyers.
Locally, the Colorado Association of REALTORS® reported a monthly record of 10,771 single-family home sales in July — a 21 percent increase year-over-year. The state also saw an 8.6 percent jump in new listings, though the number of active listings for single family homes dropped by about 42 percent year-over-year.
New single family home sales also surged in July, supported by a renewed consumer focus on the importance of housing, and rising demand in lower-density markets like suburbs and exurbs.
Census and HUD estimated new home sales in July at $901,000, an approximate 14% gain over June, and the strongest annual rate since the end of 2006. April data showing 570,000 new home sales represents the low point of sales for the current recession. The April rate was 26% lower than the prior peak, pre-recession rate set in January.
The gains for new home sales demonstrate that housing is the leading sector for the economy. Despite double-digit unemployment, new home sales are estimated to be 8% higher for the first seven months of 2020 compared to the first seven months of 2019.
Sales are increasingly coming from homes that have not started construction, with that count up 34% year-over-year. In contrast, sales of completed new homes that are ready for occupancy are down almost 24%. These measures point to continued gains for single-family construction ahead.
Thus far in 2020, new home sales are higher in all regions. Sales on a year-to-date basis are 5% higher in the South, 9% in the West, 20% in the Midwest, and 22% higher in the Northeast.
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Source: Audrey Conklin FOXBusiness, Robert Dietz, www.eyeonhousing.org, Fan-Yu Kuo, www.eyeonhousing.org