Pending Home Sales rose 0.9% from June to July, which was much stronger than estimates of a 0.6% drop. While sales were down 14% from a year earlier, this is not from a lack of demand but a lack of inventory, which was nearly 15% lower over the same period. Pending Home Sales measure signed contracts on existing homes, which represent the largest segment of transactions, making this a crucial measure for taking the pulse of the housing market.

What’s the bottom line? Despite the media’s best efforts to put a negative spin on this report, this was the second monthly increase in a row and shows strength in the housing sector, especially considering that July saw elevated mortgage rates and historically tight inventory. Lawrence Yun, chief economist for the National Association of REALTORS® (NAR), noted that “the small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home buying offers.”