Pending home sales were on the rise for the month of July according to the latest Pending Home Sales Index (PMI) report from the National Association of Realtors (NAR).
The PMI is a forward-looking indicator based on contract signings, but not closings. The month of July saw a 2.4 percent rise in signings. This is 12.4 percent above July 2011.
Lawrence Yun, NAR chief economist, said the index is at the highest level since April 2010, which was shortly before the closing deadline for the home buyer tax credit. "While the month-to-month movement has been uneven, more importantly we now have 15 consecutive months of year-over-year gains in contract activity," Yun said.
Limited inventory is constraining market activity. "All regions saw monthly increases in home-buying activity except for the West, which is now experiencing an acute inventory shortage," Yun added.
Increases were experienced in all regions except the West, which slipped 1.7 percent in July. The largest pending home sale rise was seen in the South, which rose 5.2 percent over June levels.
All four regions are above year ago levels. The West continues to post the most meager gains -- at just 1.3 percent above 2011, but all other regions are in double-digit gains.
The Midwest is boasting a 20.2 percent gain above 2011 levels. These gains are welcome news for homeowners all across the nation. Additionally, the NAR reports that existing-home sales are projected to continue to rise throughout the rest of 2012 -- gaining 8 to 9 percent. 2013 is expected to produce another 7 to 8 percent gain.
Home prices are predicted to follow suite. "Falling visible and shadow inventories point toward continuing price gains. Expected gains in housing starts of 25 to 30 percent this year, and nearly 50 percent in 2013, are insufficient to meet the growing housing demand," Yun said.
The number of mortgage applications fell again this week, down 4.3 percent from the week prior according to the Mortgage Bankers Association. The Refinance Index decreased 6 percent from the previous week to its lowest level since May 11, 2012.
The economy continues to make strides in improvement, though. As of July, the unemployment rate has fallen to 8.3 percent. This is far lower than the peak of 10 percent seen during the recession. According to Ben Bernanke, Federal Reserve Chairman, in an address to the Federal Reserve Bank of Kansas City Economic Symposium in Jackson Hole, Wyoming, payrolls have risen by 4 million jobs from their low point.
Bernanke reports there is still much work to be done. "The unemployment rate remains more than 2 percentage points above what most Federal Open Market Committee (FOMC) participants see as its longer-run normal value, and other indicators--such as the labor force participation rate and the number of people working part time for economic reasons--confirm that labor force utilization remains at very low levels."
He notes, "Unless the economy begins to grow more quickly than it has recently, the unemployment rate is likely to remain far above levels consistent with maximum employment for some time."
Published: September 10, 2012
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