Pending us home sales at nine-year high

Photo: Fifth World Art

Pending sales of US homes have risen to their highest level in nine years.

New figures from the National Association of Realtors show that pending sales increased 3.4 per cent to 112.4 in April from a slight upward revision of 108.7 in March. Pending sales have now risen for four months in a row and are 14 per cent above April 2014 — the largest annual increase since September 2012. The index has now increased year-over-year for eight consecutive months and is at its highest level since May 2006.

Lawrence Yun, NAR chief economist, says the steady gains in contract activity each month this year highlight the fact that buyer demand is strong.

"Realtors are saying foot traffic remains elevated this spring despite limited — and in some cases severe — inventory shortages in many metro areas," says Yun.

"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. As a result, home prices are up and accelerating in many markets."

Following April's decline in existing-home sales, Yun expects a rebound heading into the summer, 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."

Total existing-home sales in 2015 are forecast to be around 5.24 million, an increase of 6.1 per cent from 2014. The national median existing-home price for all of this year is expected to increase around 6.7 perc ent. In 2014, existing-home sales declined 2.9 per cent and prices rose 5.7 per cent.