May Pending Home Sales Reach Highest Level in Over Six Years

Pending home sales rose in May to the highest level since late 2006, implying a possible spark as mortgage interest rates began to rise, according to the National Association of Realtors®.

 

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 6.7 percent in May. Contract activity is at the strongest pace since December 2006.

 

Lawrence Yun, NAR chief economist, said there may be a fence-jumping effect.  “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,” he said.  “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 more than 12 percent.

 

Existing-home sales are projected up to increase 9.0 percent, the highest in seven years.

 

 

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