Pending Home Sales Rise Less Than Expected

Pending home sales in April rosernabove those in the previous period for the second month in a row.  The National Association of Realtors® saidrnthat contract signings in April increased 0.4 percent from those in March,rnsending the NAR’s Pending Home Sales Index to 97.8 from 97.4.  The Index is 9.2 percent lower than in Aprilrn2013 when it was at 107.7.  Economists surveyed by Reuters expected a 1.0 percent increase.</p

The Pending Home Sales Index (PHSI) isrna forward looking indicator of home sales. rnContracts counted in the index are generally expected to close as salesrnwithin about 60 days.</p

Lawrence Yun, NAR chief economist, expects a gradual uptrend inrnhome sales. “Higher inventory levels are giving buyers more choices, and arnslight decline in mortgage interest rates this spring is raising prospectivernhome buyers’ confidence,” he said. “An uptrend in closed sales is expected,rnalthough some months will encounter a modest setback.”</p

Contractrnsignings increased in two of the nation’s regions but remain below April 2013rnlevels in all four.  The PHSI in thernNortheast was 79.3, 0.6 percent higher than in March but 12.0 percent below arnyear ago. In the Midwest the index rose 5.0 percent to 99.2 but is 6.9 percentrnbelow April 2013. Pending home sales in the South slipped 0.6 percent to anrnindex of 111.9 in April, 6.4 percent below a year earlier, and the index in thernWest was 88.4 in April, down 2.9 percent and 15.0 percent from the two earlierrnperiods. </p

Based on whatrnit called sub-par activity in the first quarter, NAR is projecting that 2014rnexisting home sales will be modestly below the nearly 5.1 million sales inrn2013, but should be close to 5.3 million in 2015. The national medianrnexisting-home price is projected to grow between 5 and 6 percent this year, andrnin the range of 4 to 5 percent in 2015.</p

Yun projectsrnthe 30-year fixed-rate mortgage to trend up and average 5.5 percent next year.rn”The extent to which higher mortgage interest rates will impact housingrnaffordability and sales depends on income growth, ongoing improvement in thernlabor market and any change to mortgage underwriting conditions,” he said.</p

The PHSI isrnbased on a large national sample, typically representing about 20 percent ofrntransactions for existing-home sales. An index of 100 is equal to the averagernlevel of contract activity during 2001, which was the first year to be examined.rnBy coincidence, the volume of existing-home sales in 2001 fell within the rangernof 5.0 to 5.5 million, which is considered normal for the current U.S.rnpopulation.

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