Contracts to purchase previously owned homes rose more than forecast in July, a sign of renewed momentum in residential real estate.
The pending home sales index gained 3.3% after a 1.3% decrease in June that was larger than initially reported, the National Association of Realtors reported. The median projection in a Bloomberg News survey of economists called for the index to advance 0.5%.
A pickup in hiring, rising property values and historically low interest rates are lifting home sales and prompting builders to break more ground. Faster wage growth and easier access to credit would give a bigger boost to the market.
“Housing is on a gradual glide path of improvement,” said Gennadiy Goldberg, TD Securities USA. “If you had more wage growth people would be more inclined to buy homes.”
Estimates in the Bloomberg survey of 37 economists ranged from a decline of 0.5% to an advance of 3%.
For housing, purchase contracts fell 2.7% in the 12 months ending in July after a 4.7% annual decline in June that was bigger than previously estimated, the NAR report showed. July marked the 10th month of year-over-year declines.
The pending sales index was 105.9 on a seasonally-adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the NAR.
Pending sales rose in three of four regions, up 6.2% in the Northeast, 4.2% in the South and 4% in the West. Purchase contracts fell 0.4% in the Midwest.
“Steady job additions to the economy are helping family finances and giving them added confidence to enter the market,” NAR chief economist Lawrence Yun said in a statement.
Economists consider pending sales a leading indicator because they track new purchase contracts. Existing-home sales are tabulated when a deal closes, usually a month or two later.