A Historic Rebound for the Housing Market
A Historic Rebound for the Housing Market
Pending Home Sales increased by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. So, what exactly are pending home sales, and why is this rebound so important?
According to NAR, the Pending Home Sales Index (PHS) is:
“A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”
In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes in each state.
Why is this rebound important?
With the COVID-19 pandemic and a shutdown of the economy, we saw a steep two-month decline in the number of houses that went into contract. In May, however, that number increased dramatically (See graph below):
This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:
“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:
“More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”
As we move through the year, we’ll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. The lack of overall inventory, however, is still a challenge, and it is creating an opportunity for homeowners who are ready to sell. As the graph below shows, during the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers.
If you decided not to sell this spring due to the health crisis, maybe it’s time to jump back into the market while buyers are actively looking for homes. Let’s connect today to determine your best move forward.
5 H’s: Humble, Hardworking, Honest, Hustling, Honed.
Completely out of the blue we needed to sell our home, FAST. I’ve worked in real estate closing for over 15 years-I knew through the business Amanda was good, her rep definitely preceded her. I knew she handled “the big houses” and frankly I worried my little starter home wouldn’t interest her. Then.... we met. 5 H’s: Humble, Hardworking, Honest, Hustling, Honed. From minute one she set out EXACTLY what we needed to do, never missed a beat in communication (with two Type A high maintenance sellers), bottom line she made a molehill out of our mountain, kept us in a comfort zone, we sold in 2 days after only 30 days of preparation. This realtor has not only studied her craft, she has honed the art of taking care of her clients and getting the job of SOLD done. There’s a reason business is built on reputation, and I can’t say enough for how hard Amanda has worked to be top notch in technology, excellent in her field and at taking care of her clients.
Daphne was there for us every time we had questions or needed her help!
The experience with Daphne was fun, knowledgeable, and professional. She worked with us from out of state, then when we arrived, she continued to help us, and we found our home quickly. She was there for us every time we had questions or needed her help. If we ever needed a realtor again, we would DEFINITELY use Daphne!
Kelli shows a never quit attitude for the client!
This was my first experience buying a home, Kelli was very informative when answering questions. Being a single father in a competitive market Kelli was continuously showing me potential houses. Kelli shows a never quit attitude for the client. Kelli had a good attitude through out the whole process. I have been recommending her to other clients looking to buy a home.