The Pending Home Sales Index, a forward-looking indicator, rose 4.3% to 82.3 based on contracts signed in August from a downwardly revised 78.9 in July, but is 20.1% below August 2009 when it was 103.0. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said the latest data is consistent with a gradual improvement in home sales in upcoming months. "Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market," he said. "However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence."
Although Yun expects a continuing steady rise in home sales from favorable affordability conditions and some job creation, he cautioned any sudden rise in mortgage rates could slow the recovery.
"Current low consumer price inflation has helped keep mortgage interest rates very attractive this year," he said. "However, recent rising trends in producer prices at the intermediate and early stages of production, along with very high commodity prices, are raising concerns about future inflation and future mortgage interest rates."
"Higher inflation would mean higher mortgage interest rates," Yun added. "In the meantime, housing affordability is hovering near record highs."