The National Association of Realtors reported This Week in Real Estate that the pending home sales index in May experienced the highest month-over-month increase in its 19-year history. Consumer confidence in June also realized the largest monthly gain in more than 8 years. Below are a few newsworthy events from the final few days of June and first days of July that influence our business:
Pending Home Sales Notch Record-Setting 44.3% Monthly Increase in May. Pending home sales mounted a record comeback in May, seeing encouraging contract activity after two previous months of declines brought on by the Coronavirus pandemic, according to the National Association of Realtors®. The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 44.3% to 99.6 in May, chronicling the highest month-over-month gain in the index since NAR started this series in January 2001. Year-over-year, contract signings fell 5.1%. An index of 100 is equal to the level of contract activity in 2001. “This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.
The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10% – even after missing the spring buying season due to the pandemic lockdown,” Yun said. NAR now expects existing-home sales to reach 4.93 million units in 2020 and new home sales to hit 690,000. “All figures light up in 2021 with positive GDP, employment, housing starts and home sales.” Yun noted that in 2021, sales are forecast to rise to 5.35 million units for existing homes and 800,000 for new homes. The index in the West jumped 56.2% in May to 89.2, down 2.5% from a year ago.
Consumer Confidence Increases in June. After a sharp decline in April, consumer confidence improved in June for a second straight month, as the economy began to reopen and unemployment claims showed improvement. The Consumer Confidence Index, reported by the Conference Board, rose 12.2 points from 85.9 to 98.1 in June, the largest monthly gain since November 2011. The Present Situation Index jumped 17.8 points from 68.4 to 86.2, and the Expectation Situation Index increased 8.4 points from 97.6 to 106, almost back to February level.
Housing Market Recovery: Things Are Looking Up. The housing market continues to show positive signs of recovery, according to realtor.com’s weekly Housing Market Recovery Index, yet the effects of COVID-19 still remain a concern. The index is set to 100 for the last week of January and a value of 100 means the market has recovered to the pace seen that month. Housing demand, home prices, pace of sales and inventory are all positively climbing, although still lower than that January baseline. Housing demand has bounced back as summer home-buying is in full-force, with that part of the housing index reaching 119.5. The index also revealed that the pace of sales, or time on market, reached 85.9. Meanwhile, the home price component also moved further past the recovery threshold, with this week’s index reaching 102.6 – as COVID-19 treks on and housing inventory remains constricted, leading to home prices rising.