The US housing market is still benefiting from lower mortgage rates, as more Americans signed contracts to buy homes in September.
The National Association of Realtors said Tuesday that its pending home sales index rose 1.5% from August to September to 108.7, its highest level since December 2017. Measured Y-Y, pending home sales have risen 3.9%.
Home buying has grown more affordable thanks to steadily dropping mortgage rates. The average interest rate on a 30-year fixed-rate mortgage is 3.75, according to Freddie Mac. That is down nearly a full percentage point from November 2018.
But, rising home prices, boosted by a shortage of properties on the market, have limited potential sales growth.
The gap between home prices and average wage gains had been narrowing until recently. But there are signs that lower mortgage rates are now starting to cause prices to accelerate.
Separate Case-Shiller home price figures released Tuesday showed that home values had risen just 2% for the 12 months that ended in August, below the annual wage growth of nearly 3%.
This month’s pending sales ticked up in the Midwest and the South but slipped in the pricier Northeast and West.
Pending sales are a measure of home purchases that are usually completed a month or 2 later.
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