Pending Home Sales Surge for a Second Straight Month
Didier Malagies • July 30, 2020
Pending Home Sales Surge for a Second Straight Month
Jordan Borchard posted in
Housing in Housing News
Pending Home Sales Surge for a Second Straight Month
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Written by: Kathleen Howleen
U.S. pending home sales increased 17% in June, the second consecutive month of double-digit gains, as low mortgage rates spurred demand for homes.
A seasonally adjusted index measuring signed contracts was 6.3% above the year-ago level after state lockdowns caused by the COVID-19 pandemic pushed transactions into summer months, said Lawrence Yun, chief economist of the National Association of Realtors.
“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” said Yun. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”
The Fed began buying Treasuries and mortgage-backed securities in March to grease the wheels of the credit markets. That sent interest rates tumbling toward an all-time low reached in mid-July, when the average U.S. fixed rate for a 30-year home loan fell to 2.98%, according to Freddie Mac. It was the first time it broke the 3% threshold in a data series that goes back to 1971.
Sales of existing homes probably will fall by 3% in 2020 to 5.18 million, and sales of new homes likely will rise by 3% to 704,000, Yun said in a forecast he issued in tandem with the home sales report.
The median price of an existing home this year probably will increase 4.3% to $283,600, the forecast said. The median price for a new home likely will gain 1.1% to $324,900, according to the forecast.
Pending home sales in the Northeast region of the U.S. rose 54% in June, the biggest gain in the report. In the Midwest, sales increased 12.2%, in the South the index was up 11.9% and in the West the gain was 11.7%, the report said.
“The Northeast’s strong bounce back comes after a lengthier lockdown, while the South has consistently outperformed the rest of the country,” Yun said. “These remarkable rebounds speak to exceptionally high buyer demand.”
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1. HOA / Condo Association Loans (Most Common) These are commercial loans made directly to the association, not individual unit owners. Typical uses Roof replacement Structural repairs Painting, paving, elevators, plumbing Insurance-driven or reserve shortfalls Key features No lien on individual units Repaid through monthly assessments Terms: 5–20 years Fixed or adjustable rates Can be structured as: Fully amortizing loan Interest-only period upfront Line of credit for phased projects Underwriting looks at Number of units Owner-occupancy ratio Delinquency rate Budget, reserves, and assessment history No personal guarantees from owners 2. Special Assessment Financing (Owner-Friendly Option) Instead of asking owners to write large checks upfront: The association levies a special assessment Owners can finance their portion monthly Reduces resistance and default risk Keeps unit owners on predictable payments This is especially helpful in senior-heavy or fixed-income communities. 3. Reserve Replenishment Loans If reserves were drained for an emergency repair: Association borrows to rebuild reserves Keeps the condo compliant with lender and insurance requirements Helps protect unit values and marketability 4. Florida-Specific Reality (Important) Given your frequent focus on Florida condos, this resonates strongly right now: New structural integrity & reserve requirements Insurance-driven roof timelines Older associations facing multi-million-dollar projects Financing often prevents forced unit sales or assessment shock Many boards don’t realize financing is even an option until it’s explained clearly. 5. How to Position the Conversation (What to Say) You can frame it simply: “Rather than a large one-time special assessment, the association can finance the project and spread the cost over time—keeping dues manageable and protecting property values.” That line alone opens the door. 6. What Lenders Will Usually Ask For Current budget and balance sheet Reserve study (if available) Insurance certificates Delinquency report Project scope and contractor estimate Bottom Line Condo associations do not have to self-fund roofs or major repairs anymore. Financing: Preserves cash Reduces owner pushback Helps boards stay compliant Protects resale values Tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
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