Pending home sales bounced back for a second month in a row in July, as the housing market continued to show signs that buyers were returning despite high rates on home loans.
Pending home sales rose by 0.9 percent in July compared with the previous month, according to the National Association of Realtors.
Wall Street forecasters had been expecting sales to fall by 0.5 percent.
“The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home buying offers,” said NAR Chief Economist Lawrence Yun. “Jobs are being added and, thereby, enlarging the pool of prospective home buyers. However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many.”
The housing market was put into a recession last year when the shock of rapidly rising rates drove down home affordability. As well, many homeowners have been hanging onto their current homes financed with loans with low fixed rates, depressing the number of homes on the market.
In part because the inventory of homes for sale has fallen and stayed low, home prices have not sagged much and recently have been rising. New homes sales and home construction have been boosted as buyers have fewer alternatives in the existing home market.
Despite the two monthly increases in pending home sales, transactions are down 14 percent from a year earlier.
Pending home sales are recorded when contracts are signed. They typically become closed sales 45 to 60 days later. Economists tend to view pending sales as a leading indicator for the existing home sales market.
