Contracts to purchase previously owned homes climbed in July for the sixth time in the last seven months, signaling further momentum in residential real estate.
The pending home sales index increased 0.5% after a revised 1.7% decline in June, the National Association of Realtors said Thursday. The median projection in a Bloomberg survey of economists called for the index to rise 1%.
Consistent employment growth and still-cheap borrowing costs are bolstering household balance sheets, helping Americans feel more comfortable about signing for big purchases. A bigger pickup in worker pay, alongside a tightening rental market, could provide more of a boost to housing through the end of the year.
"Whether wages are accelerating quickly or not, certainly payrolls are, and that helps," Sam Coffin, an economist at UBS Securities in New York, said before the report. "We might not see the rapid rises that we saw earlier this year, but we should still see gains."
Estimates in the Bloomberg survey of 40 economists forecasting pending home sales ranged from a decline of 2% to an advance of 4.5%. The Realtors' group revised the June data, which originally showed a 1.8% drop.
Purchase contracts increased 7.2% in the 12 months ended in July after an 11.1% annual advance in June on an unadjusted basis, the NAR report showed.
The pending sales index was 110.9 on a seasonally adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or "historically healthy" home-buying traffic, according to the NAR.
Pending sales rose in two of four regions, increasing 4% in the Northeast and 0.6% in the South. Purchase contracts fell 1.4% in the West and were little changed in the Midwest.
"The prospects for ongoing strength in the housing market remain intact for now," NAR chief economist Lawrence Yun said in a statement. "The U.S. economy is growing — albeit at a modest pace — and the labor market continues to add jobs."
Economists consider pending sales a leading indicator because they track new purchase contracts. Existing-home sales are tabulated when a deal closes, usually a month or two later.
Those resales make up about 90% of the market and climbed in July for a third month to reach the highest level since February 2007, NAR reported last week. The gain was driven by stronger sales of single-family houses even as the share of first-time buyers shrank.
