There was another increase in pending home sales in September, the second consecutive rise.
The National Association of Realtors’ Pending Home Sales Index gained 1.5% to a reading of 108.7 with a 3.9% year-over-year rise in contract signings.
The increase has been facilitated by lower mortgage rates which have offset home price increases which have exceeded income gains. This has handed homebuyers a 6% gain in homebuying power according to the NAR’s chief economist Lawrence Yun.
“Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners,” added Yun.
The gains were not universal though with pending sales rising in the Midwest and South but falling in the Northeast and West.
Yun said the national increase will not continue unabated as the current rates-boosting-affordability story is unsustainable. Greater supply is needed.
“Going forward, interest rates will surely not decline in a sizable way, so the changes in the median price will be the key to housing affordability,” he said. “But home prices are rising too fast because of insufficient inventory,” he said.
And Yun isn’t just suggesting more traditional homebuilding to address the supply shortage.
“We should explore a greater utilization of modular factory constructed homes, converting old shopping malls or vacant office space into condominiums, permitting more accessory dwelling units, and other supply-increasing actions, in order to meet the rising demand for new housing,” Yun said.