Pending Home Sales Surge 6.1%
July 1, 2014 |
Pending home sales posted a sharp 6.1 percent rise in May, as lower mortgage rates and rising inventories helped propel the market into the summer season, according to the National Association of REALTORS®’ Pending Home Sales Index, a forward-looking indicator based on contract signings. It was the largest month-over-month gain on the index since April 2010, when first-time home buyers were rushing to sign purchase contracts before a popular tax credit program ended.
All four regions across the country posted increases in pending home sales in May, led by the Northeast and West.
“The flourishing stock market the last few years has propelled sales in the higher price brackets, while sales for homes under $250,000 are 10 percent behind last year’s pace,” says Lawrence Yun, NAR’s chief economist. “Meanwhile, apartment rents are expected to rise 8 percent cumulatively over the next two years because of tight availability. Solid income growth and a slight easing in underwriting standards are needed to encourage first-time buyer participation, especially as renting becomes less affordable.”
Yun says home sales will likely rise the second half of the year but “won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”
Despite the rise in May, pending home sales remained 5.2 percent below their levels a year ago.
The following is a breakdown by region of the latest Pending Home Sales Index reading:
- Northeast: contracts rose 8.8 percent month-over-month in May and are 0.2 percent above year-ago levels.
- Midwest: contracts rose 6.3 percent month-over-month in May but remain 6.6 percent below May 2013 levels.
- South: contracts increased 4.4 percent month-over-month in May but are 2.9 percent below year-ago levels.
- West: contracts increased 7.6 percent month-over-month in May but remain 11.1 percent below May 2013 levels.