After rebounds in new- and existing-home sales, pending home sales in June were expected to continue to surge (after screaming 44% higher MoM in May) and they did, rising 16.6% MoM (beating the 15.0% expectations) and sending the YoY sales number UP 12.7%...
Source: Bloomberg
This is the biggest annual rise in pending home sales in over 5 years as mortgage rates hit record lows.
“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” Lawrence Yun, NAR’s chief economist, said in a statement.
“Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”
And the pending home sales index is back at its highest since 2006...
And in case you're wondering why the housing market was able to bounce so quickly in the face of an historic shock which left 22 million people unemployed? Here BofA offers five explanations:
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An uneven recession: the shock disproportionally impacted the lower income population who are less likely to be homeowners. Consider that 55% of households earning less than $35K a year lost employment income vs. only 40% of those earning $75K and above. According to the NAR, the median household income of recent homebuyers is $93k.
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Record low interest rates: mortgage rates reached a new historic low last week. Average monthly mortgage payments have declined by $80/month relative to this time last year due to lower mortgage rates.
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Running lean pre-crisis: inventory...