US pending home sales increased in July consecutively for a second month

US pending home sales rose in July for the second month in a row

An Overview of the Situation

What a year it has been for the US housing market. With the COVID-19 pandemic turning everything upside down, tracking trends in home sales has been more important than ever. One trend that certainly stands out is the rise in pending home sales for the second month in a row, as we saw in July this year. This didn’t just hint towards the adaptive resilience and recovery of the housing market amidst a crisis but also revealed interesting patterns in consumer behavior.

Despite uncertainties surrounding employment and economy, people are pushing forward with their plans to buy homes. This can be attributed to various factors, from record low mortgage rates enticing buyers into the market to the new work-from-home culture increasing the demand for more spacious accommodations.

While increases in any sector during such trying economic times may be surprising, it’s crucial to understand that this rise does not indicate an end to volatility. Experts warn that the situation will continue to change and evolve, perhaps even daily, depending upon numerous unpredictable factors like virus cases, vaccine development, impact on the job market, federal aid, etc.

Let’s look at Joe, an engineer based in San Francisco who always longed for a home in Sacramento. The work from home culture gave him an opportunity to move to his desired city without compromising his career. Furthermore, the lower interest rates reduced his mortgage payments, enabling him to afford his dream home.

• July witnessed a national rise in pending home sales, marking the second consecutive month of growth.
• The current surge was driven by multiple factors, such as low mortgage rates and home-working trends.
• Significant incline in cities and states offering relatively affordable housing options.
• San Francisco, Seattle, and other expensive cities have witnessed many residents purchasing homes elsewhere due to remote work flexibility.
• This increase indicates strong consumer confidence despite the overall volatile economic scenario.
• However, experts suggest that this trend might not be stable and depend upon several dynamic factors.

A Look at the Numbers

A closer look at the figures provides a clearer picture of how the real estate market has been faring amidst the ongoing global issues. According to data published by the National Association of Realtors (NAR), pending home sales in the United States rose by 5.9% in July, compared to June, and are 15.5% higher than July 2019. These numbers have indeed taken both economists and potential buyers by surprise considering the circumstances but reflect the resiliency of the American housing market.

However, we need to note that housing inventory remains a continuing problem. The NAR points out that while hikes in absolute sales are encouraging, accumulated unsold houses could become a significant issue going forward. Thus, understanding the nuances within the market is essential for decoding the actual meaning behind these figures.

Also, the sales haven’t been uniform across all regions. The Midwest experienced the biggest jump, followed by the Northeast while the West had less drastic changes. So, regional differences in addition to overall national trends should be factored when analyzing the real estate market trends.

Assuming Mary wanted to sell her property in Miami. Given the current landscape, she’d likely be able to sell her house remarkably quickly due to the low supply of homes available, leading to competition among potential buyers, which traditionally means higher house prices.

• According to NAR data, US pending home sales increased by 5.9% in July from June, and 15.5% over July 2019.
• Housing inventory shortage remains a challenge, which if continues, can cause problems for the market.
• The rise in sales isn’t uniform across the country, with the Midwest showing the highest increase.
• In light of high demand and low supply, homeowners looking to sell are set to benefit.
• Different regions have different market dynamics, with some areas such as coastal cities seeing more outbound movement.
• For informed decision making, potential buyers and sellers must be aware of both national and regional trends.

The Economists’ Perspective

Economists’ views on this rising trend in pending home sales vary greatly, with some viewing it as a positive sign of recovery while others expressing caution. Larry Yun, NAR’s chief economist, optimistically asserts that the housing market is leading the way out of the current economic downturn.

However, there are numerous economists like Danielle Hale, chief economist at Realtor.com, who argue that although sales are brisk right now fueled largely by low-interest rates, uncertainties around the duration of this incentive and decline in upcoming home listings could pose future challenges. Additionally, the housing market is said to be ‘pulled in opposite directions’ – limited supply pushes up prices, yet job losses put downward pressure.

Finally, there’s one major consensus – recognizing the changing behavioral pattern. Working from home trend is transforming where people want to live and how they place value on their residence property, thus influencing the housing markets in ways that few would have anticipated pre-pandemic.

Let’s consider the case of Robert, a New York-based finance pro. With his company implementing long-term remote working policies, Robert decided to leverage the low interest rates to upgrade to a bigger home further outside of the city, where property prices are lower, providing him with more bang for his buck.

• Economists hold differing views on the current rise in pending home sales.
• NAR’s Chief Economist takes a hopeful stand suggesting that the housing market is leading economic recovery.
• On the flip side, concerns about the sustainability of low-interest rates and future supply shortages make other economists urge caution.
• Pressure from both ends – limited supply driving prices up while job losses pressuring it downwards – presents a unique challenge.
• The shift towards remote working is fundamentally transforming housing market trends.
• Buyers are increasingly valuing the possibility of larger, more cost-effective homes over proximity to city centers.

Summary Table