PHSI, Overall Housing Market Recovering at Historic Rate Post-Covid Shutdown
The National Association of Realtors (NAR) reported pending home sales surged nearly three times the consensus forecast by 8.8% in August, marking the fourth straight month of solid gains. Each of the four major regions posted growth in both month-over-month and year-over-year transactions.
The Pending Home Sales Index (PHSI) — which is a forward-looking indicator of home sales based on contract signings, rose 8.8% to 132.8 in August. That’s a record high and year-over-year contract signings are now up 24.2%.
Forecasts ranged from a low of 2.0% to a high of 4.0%. The consensus forecast was only 3.1%. An index of 100 is equal to the level of contract activity in 2001.
“Tremendously low mortgage rates – below 3% – have again helped pending home sales climb in August,” said Lawrence Yun, NAR’s chief economist. “Additionally, the Fed intends to hold short-term fed funds rates near 0% for the foreseeable future, which should in the absence of inflationary pressure keep mortgage rates low, and that will undoubtably aid homebuyers continuing to enter the marketplace.”
“While I did very much expect the housing sector to be stable during the pandemic-induced economic shutdowns, I am pleasantly surprised to see the industry bounce back so strongly and so quickly.”
As a result of the stronger-than-expected recovery and growth in housing, the NAR raised its forecast for the market.
Pending Home Sales By Region
In the Northeast, the PHSI rose 4.3% to 117.1 in August, soaring 26.0% from a year ago. In the Midwest, the index gained 8.6% to 124.5, up 25.0% from August 2019.
Pending home sales in the South also rose 8.6%, hitting an index of 154.2 in August, up 23.6% year-over-year. The index in the West shot up 13.1% in August to 120.3, up 23.6% from a year ago.
Housing Primed to Lead Economic Recovery
As People’s Pundit Daily (PPD) recently reported, indicators widely show the U.S. housing market is “booming”, surpassing pre-pandemic levels and expectations. Experts now foresee housing leading the economic recovery and have raised growth forecasts for the sector.
The NAHB Housing Market Index (HMI) reported builder confidence unexpectedly rose another 5 points to 83 in September, smashing the all-time high and beating the consensus forecast. The HMI started 2020 at a 20-year high.
The National Association of Realtors (NAR) reported existing home sales in August hit the highest level since December 2006. The stronger-than-expected increase for the third consecutive month followed a record 24.7% gain in July.
New residential construction statistics for housing starts and building permits skyrocketed in July, despite lingering effects due to coronavirus (COVID-19). The former gained 22.6% (±14.7%) and the latter 18.8% (±1.1%), respectively.