Published: Thu, September 01, 2016
Economy | By Melissa Porter

Pending US home sales strengthened in July

Pending US home sales strengthened in July

The National Association of Realtors says its seasonally adjusted pending home sales index rose 1.3 percent last month to 111.3, the highest reading since April.

Pending home sales in the USA rose more than expected in July, bolstering optimism over the health of the housing sector, industry data showed on Wednesday. The number of signed contracts improved in the Northeast, South and West.

"More home shoppers having success is good news for the housing market heading into the fall", Yun said.

Economists had forecast that pending sales, which measure contract activity and are an indicator of future existing home sales, rose 0.7% month-on-month, according to Bloomberg.

The index in the West gained 7.3% in July to 108.7 and is 6.2% higher on a year-over-year basis.

It was the highest reading in more than 10 years, NAR reports. "There's little doubt there'd be more sales activity right now if there were more affordable listings on the market".

Even so, the USA homeownership rate fell to the lowest level in more than 50 years in the second quarter of 2016, a reflection of the lingering effects of the housing bust, financial hurdles to buying and shifting demographics across the country. "If homebuilding increases in the region to tame price growth and alleviate the ongoing affordability concerns, the healthy rate of job gains should support more sales", Yun said. With more demand from younger buyers today, builders are moving slowly back to the entry-level market.

The median home sales price was $244,100 in July, up 5.3 percent from a year ago.

After the report, EUR/USD was trading at 1.1144 from around 1.1145 ahead of the release of the data, GBP/USD was at 1.3116 from 1.3101 earlier, while USD/JPY was at 103.35 from 103.29 earlier.

According to the Realtors Confidence Index, sales to first-time buyers in 2016 have averaged 31 percent through July; they were 30 percent in 2015.

Nationally, the inventory shortage also hit purchases of homes in July. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales.

Completed sales of homes fell 3.2 percent in July to a seasonally adjusted annual rate of 5.39 million, the Realtors reported last week. The August report is due out Friday.

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