The number of homes under sales contract hit a record high in the National Association of Realtors’ 19-year history of monthly surveys.
The number of pending homes increased 8.8 percent since July, and were up nearly a quarter since last August. The pending home sales index reached a high-water mark of 132.8, meaning sales were 32.8 percent higher than the index’s 2001 starting level of 100.
“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,” said Lawrence Yun, NAR’s chief economist.
Near zero interest rates from the Federal Reserve have helped push mortgage rates to record lows, which has helped fuel the buying spree.
“Tremendously low mortgage rates – below 3 percent – have again helped pending home sales climb in August,” he said, though he noted that some of the sales could fall through, so the spike may not translate to record sales.
Joel Kan, a forecaster at the Mortgage Bankers Association, said the number of listings was not keeping up with demand.
“The competitive purchase market is putting upward pressure on home prices and reducing affordability,” he said.
“New construction has picked up significantly, but that pace may not be sustainable given the rise in builder material costs and the upcoming colder winter months. That is why more existing supply is also needed to keep up with demand,” he added.
Some analysts have pointed to the uptick in home sales as evidence of a so-called “K-shaped recovery,” in which the nation’s well off have been able to quickly bounce back and even thrive during the pandemic, while the poor and economically vulnerable have suffered.
Congress and the White House allowed a federal eviction moratorium and a $600 plus-up in weekly unemployment benefits expires at the end of July. Funding for a program to help small businesses survive and keep their employees has also ended.
The two sides are now working on a new measure, but it remains unclear whether they can overcome differences to enact a deal.