The NAR’s Pending Home Sales Index rose for the fourth consecutive month in April, increasing 3.4% to 112.4 – a 14% increase over April 2014 and the largest annual increase since September of 2012. The index is now at its highest level since May of 2006.
NAR chief economist Lawrence Yun said that there have been steady gains in contract activity each month this year, indicating strong buyer demand.
“Realtors are saying foot traffic remains elevated this spring despite limited – and in some cases severe – inventory shortgages in many metro areas,” he said. “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.”
While pending home sales were up, April saw a decline in existing-home sales. Yun does expect a rebound heading into summer – but meaningful gains will require a boost in inventory and some evidence that price growth is moderating now that interest rates are on the 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,” he said.
Total existing home sales for 2015 are forecast at around 5.24 million, a 6.1% increase from 2014. The national median existing-home price is expected to increase about 6.7%. Last year, home prices rose 5.7% and sales declined 2.9%, according to the NAR.
Pending home sales hit a 9-year high in April, according to data released Friday by the National Association of Realtors.