Infusing additional energy into a market that’s on a rebound, the National Association of Realtors (NAR) released its July pending home sales data, which showed that more Americans have signed contracts to buy a house.
In July, the index was at its highest since 2010, the report showed. The pending home sales index (PHSI) is an indicator of how the housing market will fare in coming months. It is calculated on the number of contracts signed.
According to NAR’s data, the PHSI rose 2.4 percent to 101.7 in July from 99.3 in June. This is a 12.4 percent increase from the July 2011 level of 90.5.
"While the month-to-month movement has been uneven, more importantly we now have 15 consecutive months of year-over-year gains in contract activity," Lawrence Yun, NAR’s chief economist said in a statement.
Though increasing housing demands catapulted home-buying activity in all regions, inventory shortage limited purchasing decisions in the West. Here, the index slipped 1.7 percent in July to 109.9.
All other regions saw a monthly increase in home buying activity. For instance, the PHSI in the Northeast increased 0.5 percent to 77.0 in July; in the Midwest the index grew 3.4 percent to 97.4 and in the South it rose 5.2 percent to an index of 111.7 in July.
When all other parameters such as existing home sales (set to rise up to nine percent) and increasing home prices are primed to boost the housing sector, low inventory is a major hurdle in the housing sector.
"Falling visible and shadow inventories point toward continuing price gains. Expected gains in housing starts of 25 to 30 percent this year, and nearly 50 percent in 2013, are insufficient to meet the growing housing demand," Yun said.
