US pending home sales jump in June, amid dearth of supply

A closely-followed lead indicator of activity in the US housing market jumped last month, a possible indication of firmer growth ahead.

The National Association of Realtors' pending home sales index surged in June, rising by 2.8% month-on-month (consensus: 0.4%) to reach 108.3.

In particular, NAR highlighted the 1.6% year-on-year rise seen in contract signings, which served to snap a 17-month long streak of decreases.

NAR chief economist, Lawrence Yun, linked the improvement to the current favourable conditions and said reportedly predicted that it likely marked the beginning of a positive trend.

"Job growth is doing well, the stock market is near an all-time high and home values are consistently increasing," Yun said in a statement.

"When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases."

However, despite strong demand amid rising home prices, the supply of homes available for sales continued to be inadequately low.

"Homes are selling at a breakneck pace, in less than a month, on average, for existing homes and three months for newly constructed homes," he said.

"Furthermore, homeowners’ equity in real estate has doubled over the past six years to now nearly $16trn. But the number of potential buyers exceeds the number of homes available. We need to see sizeable growth in inventory, particularly of entry-level homes, to assure wider access to homeownership."

Pending home sales, which are based on contract signings, rose in all regions led by a 5.4% jump in the West.