(Bloomberg) -- A gauge of pending US existing-home sales rose in June for the first time in three months, as buyers looking to relocate or upgrade their houses braved elevated prices and borrowing costs.
The index of contract signings from the National Association of Realtors increased 4.8% to 74.3 in June, reflecting increases in all four major regions, the group said Wednesday. The gain well exceeded the highest estimate in a Bloomberg survey of economists.
The gauge is coming off of a record low in data back to 2001 as the housing market tries to break out of a protracted slump. Mortgage rates have declined somewhat recently, encouraging more homeowners to list their properties which should eventually translate to greater sales activity.
“The rise in housing inventory is beginning to lead to more contract signings,” and more supply should hit the market in the coming months, NAR Chief Economist Lawrence Yun said in a statement. “Multiple offers are less intense, and buyers are in a more favorable position.”
That should help improve housing affordability, which is near the worst level in about 40 years, according to NAR’s index. Figures issued Tuesday by S&P CoreLogic Case-Shiller showed a gauge of national home prices rose 5.9% in May from a year ago to a fresh record.
Would-be buyers and sellers alike are counting on the Federal Reserve to lower interest rates. While odds are low that officials will cut borrowing costs at the conclusion of their two-day meeting Wednesday afternoon, swaps traders see a September rate reduction as a certainty.
Those expectations have helped push down Treasury yields and, while still double levels seen at the end of 2021, 30-year fixed mortgage rates have fallen below 7%.
The pending-sales figures tend to be a leading indicator of sales of previously owned homes, because houses typically go under contract a month or two before they’re sold.
--With assistance from Chris Middleton and Liz Capo McCormick.
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