Pending home sales soar to new record high in August

The index of pending home sales rose 8.8% in August as compared with July, hitting a new all-time high, the National Association of Realtors reported Wednesday.

It is the fourth consecutive month in which the level of Americans signing contracts to purchase homes has risen. Compared with a year ago, contract signings were up 24%.

“Tremendously low mortgage rates — below 3% — have again helped pending home sales climb in August,” Lawrence Yun, the National Association of Realtors’ chief economist, said in the report. “While I did very much expect the housing sector to be stable during the pandemic-induced economic shutdowns, I am pleasantly surprised to see the industry bounce back so strongly and so quickly.”

The index gauges real-estate transactions where a contract was signed for a previously-owned home but the sale had not yet closed, benchmarked to contract-signing activity in 2001.

Pending home sales increased across the entire country, led by a 13% gain in the West.

The pending home sales report is generally viewed as a preview of what could be expected for existing-home sales in the coming months. However, the record level set in August for contract signings won’t necessarily lead to a record level of existing-home sales, Yun said. That’s because some people will fail to close on a home after signing a contract, and there are differences in the sample sizes used to produce the reports.