Today’s pending home sales data reveals several bright spots in housing as the nation begins feeling a recovery that is slowly but surely under way.
Pending home sales are looking good
According to the National Association of Realtors, pending home sales rose 6.7 percent in May, up 12.1 percent for the year, representing its the highest level since late 2006. Mortgage interest rates are increasing, as are home prices and applications for new mortgage loans, pointing to the housing recovery being fully under way. While not completely out of hot water, the housing industry is experiencing gains, a welcome sign for homeowners and industry professionals alike.
Improvement in the the Pending Home Sales Index (contracts signed, not closed) points to a brighter future with improved sales and closings. The NAR reports that contract activity is at its strongest pace since December 2006 and that pending home sales have been over year-ago levels for the past 25 months.
Dr. Lawrence Yun, NAR chief economist, said there may be a fence-jumping effect. “Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher.”
Dr. Yun added, “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”
Upgrading the 2013 forecast
Yun upgraded the price forecast for 2013, with the national median existing-home price expected to rise more than 10 percent to nearly $195,000. This would be the strongest increase since 2005 when the median increased 12.4 percent.
Existing-home sales are projected to increase 8.5 to 9.0 percent, reaching about 5.07 million in 2013, the highest in seven years; it would be slightly above the 5.03 million total recorded in 2007.
Regional performance varied
Pending home sales in the South rose 2.8 percent to an index of 121.8 in May and are 12.3 percent above a year ago.