Pending home sales increased 8.8% in August, a record high, the National Association of Realtors reported Wednesday.
The increase marks four uninterrupted months of positive contract activity, a strong signal that the real estate market is red-hot.
Year-over-year, contract signings rose 24.2%, according to the NAR.
“Tremendously low mortgage rates — below 3% — have again helped pending home sales climb in August,” said Lawrence Yun, the NAR’s chief economist. “Additionally, the [Federal Reserve] intends to hold short-term fed funds rates near 0% for the foreseeable future, which should in the absence of inflationary pressure keep mortgage rates low, and that will undoubtedly aid homebuyers continuing to enter the marketplace.”
The increase in pending home sales 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.
The increase in pending home sales comes after the NAR reported last week that sales of existing U.S. homes in August increased by 2.4%.
The increase marks the fourth consecutive month of sales gains.
The association expects to see continued gains through the rest of the year because interest rates are at historic lows.
“Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery,” Yun said.
