After an unexpected decline in previous month, pending home sales rebounded in August, largely led by gains in the West.

The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI rose 1.6% from 105.6 in July to 107.3 in August, the second-highest level since 2018. On a year-over-year basis, sales were 2.5% higher than a year ago.

Regionally, all four major regions saw an increase in the PHSI from both last month and a year ago, particularly in the West. The PHSI in the West grew 3.1% from July, and was 8.0% up from a year ago.

The gain in all regions suggests that the slump in the West over recent years appears to be over and the housing market is starting to get a lift from lower mortgage rates. With Fed interest rate cuts and solid job growth, NAR expects sales will continue to rise in the coming months and into 2020. At the same time, rising demand and tight inventory will continue drive up home prices as well, making access to homeownership more difficult.