Pending home sales jumped in May to reach a six-year high, the National Association of Realtors said Thursday. The NAR’s pending home sales index climbed 6.7% to 112.3 in May, from a downwardly revised 105.2 (from 106.0) in April. The index was up 12.1% from May 2012 levels. The NAR said the rise in mortgage rates has prompted some would-be buyers to move. “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,” said Lawrence Yun, chief economist of the NAR. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. The NAR upgraded its median price forecast for 2013 to nearly $195,000 from exceeding $190,000 and its existing home sales forecast to a seven-year high of 5.07 million from “about” 5 million.
More Americans signed contracts in May to buy previously owned homes than at any time in more than six years, a sign of bigger progress in the industry.
The index of pending home sales jumped 6.7 percent to 112.3, the highest since December 2006, figures from the National Association of Realtors showed today in Washington. The increase exceeded all estimates in a Bloomberg survey of economists and was the biggest since April 2010.
More contract signings show Americans who had been holding off on purchases entered the market as mortgage rates started to climb, reaching an almost two-year high this week. Further gains in sales of previously owned properties will probably encourage a pickup in purchases of home furnishings, spurring economic growth.
“The housing market is pretty healthy,” Guy Lebas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia, said before the report. “When you buy a home, either new or existing, you’ve got to furnish it. It’s sort of the secondary benefits of greater home sales that support growth.”
Pending sales fell a revised 0.5 percent in April, previously reported as a 0.3 percent gain.
Estimates for pending home sales ranged from a decline of 0.9 percent to an increase of 5.5 percent, according to 43 economists surveyed by Bloomberg.