US pending home sales up for fourth month in a row, latest index shows

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Pending home sales in the United States rose in April for the fourth straight month and reached their highest level in nine years, according to the latest data. This rise was led by the Northeast and Midwest, but all four major regions saw increases in April, according to the pending home sales index from the National Association of Realtors. The forward looking indicator based on contract signings increased 3.4% to 112.4 in April from a slight upward revision of 108.7 in March and is now 14% above April 2014, the largest annual increase since September 2012. The index has now increased year on year for eight consecutive months and is at its highest level since May 2006 when it was 112.5. According to Lawrence Yun, NAR chief economist, the steady gains in contract activity each month this year highlight the fact that buyer demand is strong. ‘Real estate agents are saying foot traffic remains elevated this spring despite limited, and in some cases severe, inventory shortages in many metro areas,’ he said. ‘Home owners 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,’ he added. 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% 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,’ explained Yun. After falling four straight months, the index in the Northeast bounced back solidly, up 10.1% to 88.3 in April, and is now 9.4% above a year ago. In the Midwest the index increased 5% to 113 in April, and is 13.3% above April 2014. Continue reading →

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