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Economy in Brief

U.S. Pending Home Sales Rise To The Highest Level In Two Years
by Tom Moeller August 4, 2009

The rebound in housing activity grew stronger last month as mortgage rates remained low. The National Association of Realtors reported that June pending sales of existing homes jumped 3.6% from May to their highest level since June of 2007. The gain easily outpaced Consensus expectations for a slight 0.6% increase in monthly sales.

Home sales rose last month in each of the country's regions, but they surged in the South and the West. In the South, sales jumped 7.1% m/m to lift them nearly nine percent from June of 2008. In the West, sales also were strong and posted a 7.1% gain. Though strong last month, sales have meandered sideways for the last year. In the Northeast, sales ticked up just 0.4% from May. That followed strong gains during three of the prior four months and left them at their highest in two years. Finally, sales in the Midwest also rose but by a slight 0.8% m/m; nevertheless, they were at their highest level since 2007.

These home sales figures are analogous to the new home sales data from the Commerce Department in that they measure existing home sales when the sales contract is signed, not at the time the sale is closed. The series dates back to 2001.

The latest monthly gains in home sales have been accompanied by improvement in prices. The median sales price of an existing home increased 4.1% in June (-15.4% y/y) and prices have risen 7.1% since December. That latest increase reduced the affordability index of a home but it nevertheless remained up by 29.9% year-to-year and by three-quarters from the 2006 low. The median price of an existing home rose to $181,600 (-15.0% y/y) and the average mortgage rate was 5.2%, down from 6.3% one year ago.

The Realtors Association indicated in an earlier report that the number of homes on the market and available for sale slipped m/m and was down 14.9% versus one year earlier. At the current sales rate, there was a 9.4 months' supply of homes on the market which was near the lowest since June 2007. However, it still was up from the 8.9 months supply during all of 2007 and 6.5 months during 2006. At the high, there was a 10.4 months supply during all of last year.

The pending home sales data are available in Haver's PREALTOR database. The number of homes on the market and prices are in the REALTOR database.

Pending Home Sales (2001=100)  June May Y/Y 2008 2007 2006 
Total 94.6 91.3    6.7% 86.8 95.8 112.1 
  Northeast 81.2 80.9 5.9 72.6 85.6 98.5
  Midwest 89.9 89.2 11.5 80.6 89.5 102.0
  South 100.7 94.0 8.9 89.8 107.3 127.3
  West 100.4 97.6 -0.2 99.3 92.1 109.5
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