The Housing Market’s Historic Rebound

The National Association of Realtors (NAR) has been tracking pending home sales for almost 20 years now. In fact, May 2020 marked the highest month-over-month gain for pending home sales with an increase of 44.3%.

 

For the real estate market, pending home sales is an important gauge in the housing market’s vitality. The Pending Home Sales Index (PHS) is defined by the National Association of Realtors as, “A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”

The COVID-19 pandemic and the shutdown of the U.S. economy caused a two-month decline in the PHS. In May, however, there was a huge jump in pending home sales. The housing market is recovering with buyers currently purchasing homes.

“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce-back also speaks to how the housing sector could lead the way for a broader economic recovery,” said Lawrence Yun, Chief Economist at NAR.

Yun goes on to explain that more listings are coming on the market helping with inventory choices but inventory is still low. Home construction still needs to catch up from “the persistent underproduction of homes over the past decade.”

Builders are taking notice and we are seeing a good increase in the production of new homes. As the graph shows, there has been a huge decrease in year-over-year in the supply of homes for sale. The bottom line is the inventory is not keeping up with the demand from potential homebuyers.

Click Here For the Source of the Information.