NAR: Pending Sales Expand

Led by the West, the Pending Home Sales Index increased 1.3 percent in July to the highest level since April, and increased 1.4 percent year-over-year. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), increased to 111.3 in July from a downwardly revised 109.9 in June.

The PHSI surged to 108.7 in the West from 101.3 in June. The Northeast and South increased by 0.8 percent in July, while the Midwest declined by 2.9 percent. Year-over-year, the PHSI increased 6.2 percent in the West, 1.1 percent in the Northeast and 0.4 percent in the South, but decreased 1.1 percent in the Midwest.

Although existing sales decreased 3.2 percent in July, there was a 2.5 percent increase in the West last month. The housing recovery is reaching the point in the cycle when new residential construction is adding smaller entry-level homes into inventory. Townhouse construction outpaced the rest of the single-family market during the second quarter of 2016. That trend toward smaller and less expensive new single-family construction has begun to improve affordability in the West, sparking momentum that suggests increasing sales among first-time buyers across a wider range of markets in 2016.

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