US pending home sales jump in June, NAR raises forecasts

A closely-watched lead indicator for US home sales edged past forecasts in June, underpinned in part by continued low mortgage rates.

The National Association of Realtors's Pending Home Sales Index jumped at a 16.6% month-on-month clip (consensus: 15.6%) to 116.1.

Contract signing activity improved in all regions of the country aside when compared with the previous month and, aside from the Northeast, all recorded record growth in year-on-year terms as well.

In comparison to a year ago contract signings were also higher, climbing by 6.3%.

NAR chief economist, Lawrence Yun, openly voiced his surprise at the year-on-year growth given the global pandemic still underway.

"Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy," he said.

On the back of Wednesday's figures, Yun raised his forecasts for the market in 2020 and 2021.

He now believed that existing home sales would only fall by 3% in 2020, with the annualised pace of sales seen hitting 5.6m units by the fourth quarter and new home sales set to rise by 3%.

US GDP growth of 4% in 2021 would further boost growth in existing and new home sales, which he predicted would grow by 7% and 16%, respectively.

In parallel, mortgage rates were expected to remain near 3% over the following 18 months while house prices were set to grow by 4% in 2020 and by a further 3% in 2021 as new supply hit the market.