SILVER SPRING, Md. -- U.S. pending home sales rose more than expected in August, reaching the highest level on record as low mortgage rates fuel a housing rally.
The National Association of Realtors said Wednesday that its index of pending sales rose 8.8% to a record high of 132.8. An index of 100 represents the level of contract activity in 2001. It had sunk to a low of 69 in April, when buyers and sellers were sidelined as the coronavirus swept through the U.S.
It was the fourth-straight monthly gain for the index, which is now at the highest level since 2001.
"Tremendously low mortgage rates have again helped pending home sales climb," said Lawrence Yun, the association's chief economist.
[CORONAVIRUS: Click here for our complete coverage » arkansasonline.com/coronavirus]
Contract signings are a barometer of finalized purchases over the next two months, so last month's numbers point to continued strong sales into October. August is typically a slow month, but the surge this year is partly because the spring selling season was delayed.
The housing market has been one of the highlights of the U.S. economy, which is still trying to get back its pre-virus momentum. Contract signings are now 24.2% ahead of where they were last year, after falling behind last year's pace earlier in the year because of the pandemic.
The positive pending home sales numbers follow a pair of indicators showing continued strength in the housing market. The association said last week that sales of existing homes rose 2.4% in August to its highest level since 2006. Sales are up 10.5% from a year ago and back to pre-covid-19 levels of early 2020. Also last week, the Commerce Department reported that sales of new homes rose a solid 4.8% in August after surging 13.9% in July.
Historically low interest rates of less than 3% are pushing buyers into the market, even as home prices rise because of a short supply of available properties.
The median price for an existing single-family home reached $315,000 in August, up 11.7% from August 2019. The median price of a new home sold in August was $312,800.
All four regions of the U.S. saw more contract signings for the third-straight month.
While a flood of mortgage applications shows that Americans want to buy houses, the risk is that some won't qualify for loans or will struggle to find properties they can afford. High unemployment also threatens to derail the U.S. economic recovery.
Information for this article was contributed by Matt Ott of The Associated Press and by Craig Giammona of Bloomberg News.