SILVER SPRING, Md. — More Americans signed contracts to buy homes in July, suggesting the current hot housing market could continue in the fall.
The National Association of Realtors said today that its index of pending sales rose 5.9%, to 122.1 last month. It had plunged to a low of 69 in April, when buyers and sellers were forced to the sidelines by coronavirus closures and restrictions. An index of 100 represents the level of contract activity in 2001.
Contract signings are a barometer of eventual, completed purchases during the next two months, so this month’s numbers point continued market strength in August and September.
Contract signings are now 15.5% ahead of where they were last year, after significantly trailing last year’s pace earlier in the year because of the pandemic.
Different reports during the past week have shown that sales of existing homes and new homes are both continuing to surge as large swaths of the country have opened back up this summer and people have figured out how to go about regular business despite the ongoing pandemic. Sales of new homes jumped 13.9% in July, while sales of existing homes climbed 24.7%.
Low interest rates have pushed people into the market. Interest rates on a 30-year fixed rate mortgage are at historic lows around 3%.
Besides the uncertainty of the broader economy, which continues to see about a million people a week sign up for unemployment benefits, the biggest concern in the housing market is the continuing lack of available homes. Low supply of existing homes has forced buyers into the new home market, which has also seen its supply dwindle over the past year.
That shortage of homes for sale is boosting prices. The median price for an existing home topped $300,000 for the first time on record, coming in at $304,100. That’s up a sharp 8.5% from July 2019. The median price for a new home in July rose to $330,600, up 7.2% from one year ago.
All four regions saw more contract signings for the second straight month. The Northeast saw contract signing increase 25.2%; in the West they were up 6.8%. The Midwest saw gains of 3.3% and in the South contract signings were up 0.9%.