Pending home sales rose sharply in August to their highest level in five months, signaling renewed momentum in the housing market.
The National Association of Realtors said Monday its Pending Home Sales Index increased 4.0 percent to 74.7 from July. Economists had expected a 0.7 percent rise, and the gain exceeded even the mosts optimistic forecasts. Compared with a year earlier, contract signings were up 3.8 percent.
The index, which tracks signed contracts on previously owned homes, is a forward-looking measure of housing demand because transactions typically close within one to two months. During the pandemic housing boom, the index was well above 100, underscoring how activity remains well below peak levels even with August’s advance.
Three of the four major U.S. regions saw monthly gains. The Midwest recorded the largest increase, up 8.7 percent from July and 6.7 percent from a year earlier. The South rose 3.1 percent on the month and 4.2 percent year over year. The West advanced 5.0 percent from July and was little changed from a year earlier. The Northeast slipped 1.1 percent on the month but was 2.6 percent above August 2024 levels.
Mortgage rates averaged 6.59 percent in August, down from 6.72 percent in July and 6.82 percent in June. At the start of the year, the average 30-year fixed mortgage rate was just below seven percent. They fell further to 6.35 percent in September, the lowest in a year, giving buyers some relief after a long stretch of higher borrowing costs. The stronger-than-expected increase in pending sales follows a similar surprise in new-home purchases last month, suggesting a broader pickup in housing demand may be under way.
The index is benchmarked so that a value of 100 equals the average contract activity of 2001.
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