Home-Sale Contract Signings Surge to Nearly 7-Year High

Home-Sale Contract Signings Surge to Nearly 7-Year HighJust as mortgage rates started to climb out of their historic run last month, pending home sales — or contract signings — rose to their highest level since late 2006.
The surge in activity is likely the result — at least in part — of “fence-sitters” who jumped into the market as rates bottomed out and started to reverse.
The index of pending home sales form the National Association of Realtors increased 6.7 percent to 112.3 in May from a downwardly revised 105.2 in April,.
It is 12.1 percent above May 2012 when it was 100.2. The figures represents contracts, but not closings.
Contract activity is at the strongest pace since December 2006 when it reached 112.8. Pending sales have been above year-ago levels for the past 25 months.
“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, NAR chief economist. “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”
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. That would be slightly above the 5.03 million total recorded in 2007.
The realtors’ pending home sales index covering the Northeast was unchanged at 92.3 in May but is 14.3 percent above a year ago.
In the Midwest, the index jumped 10.2 percent to 115.5 in May and is 22.2 percent higher than May 2012.
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.
The index for the West jumped 16.0 percent in May to 109.7, but with limited inventory is only 1.1 percent above May 2012.

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