Pending home sales, or contracts signings to purchase previously owned homes, jumped in April for the fourth straight month, hitting their highest level in nine years, according to the National Association of Realtors.
The Realtors’ Pending Home Sales Index increased 3.4 percent to 112.4 in April, from a slight upward revision of 108.7 in March. It is now 14 percent above April 2014 (98.6) — the largest annual increase since September 2012 (15.1 percent).
The index is now at its highest level since May 2006 (112.5).
“Realtors are saying foot traffic remains elevated this spring despite limited — and in some cases severe — inventory shortages in many metro areas,” said Lawrence Yun, NAR chief economist. “Homeowners looking to sell this spring appear to be in the driver’s seat, as there are more buyers competing for a limited number of homes available for sale.”
Following April’s decline in existing-home sales, Yun expects a rebound in the summer months. But the likelihood of meaningful gains will depend on a much-needed boost in inventory and evidence of moderating price growth — now that interest rates have started to rise.
“The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers — especially first-time buyers — are able to obtain a mortgage,” Yun said.
Total existing-home sales in 2015 are forecast to be around 5.24 million, an increase of 6.1 percent from 2014. The national median existing-home price for all of this year is expected to increase around 6.7 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.