Pending home sales in the US have finally crossed the coveted threshold of returning to pre-crisis levels, as according to the latest data from the US National Association of Realtors the metric increased in May to the highest level seen since late 2006.
Recent news has focused on rising mortgage interest rates and the positive effect this has had on the recovery. This combined with the rise in pending sales has Lawrence Yun chief executive of the NAR talking about a "spark".
The Pending Home Sales Index, a forward looking indicator based on contract signings, increased 6.7 percent to 112.3 in May from a downwardly revised 105.2 in April, and is 12.1 percent above May 2012 when it was 100.2. With this contract activity is at the strongest level since December 2006 when it reached 112.8. This means that 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 Yun.
"This implies a continuation of double digit price increases from a year earlier, with a strong push from pent up demand," he added.
Yun upgraded the price forecast for 2013, with the national median existing home price expected to rise more than 10 percent to nearly USD 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 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.
- Thursday 04 July 2013