U.S. Pending Home Sales Jump To Nearly Nine-Year High In April

(RTTNews) - Pending home sales in the U.S. increased by much more than expected in the month of April, according to a report released by the National Association of Realtors on Thursday, with pending sales jumping to their highest level in nearly nine years.

NAR said its pending home sales index surged up 3.4 percent to 112.4 in April from a slightly upwardly revised 108.7 in March. Economists had expected the index to increase by about 0.8 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the bigger than expected increase, the pending home sales index reached its highest level since hitting 112.5 in May of 2006.

The index is also up by 14.0 percent compared to the same month a year ago, reflecting the eighth consecutive month of year-over-year growth.

Lawrence Yun, NAR chief economist, said, "Realtors are saying foot traffic remains elevated this spring despite limited - and in some cases severe - inventory shortages in many metro areas."

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

The jump in pending home sales reflected growth in all four regions of the country, with the Northeast seeing a particularly strong 10.1 percent increase.

Pending home sales in the Midwest and South also rose by 5.0 percent and 2.3 percent, respectively, while pending sales in the West inched up 0.1 percent.

Last Thursday, NAR released a separate report showing an unexpected decrease in existing home sales in the month of April.

The report said existing home sales fell 3.3 percent to an annual rate of 5.04 million in April from an upwardly revised 5.21 million in March.

The decrease came as a surprise to economists, who had expected existing home sales to edge up to 5.24 million from the 5.19 million originally reported for the previous month.

Yun expects a rebound in existing home sales heading into the summer but said the likelihood of meaningful gains will depend on a much-needed boost in inventory and evidence of moderating price growth.

"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.

NAR said it expects total existing home sales of about 5.24 million in 2015, reflecting a 6.1 percent increase from last year. The median existing home price is expected to increase around 6.7 percent.