The NAR’s Pending Homes Sales Index rose 0.9% in May to 112.6, up from April’s downwardly revised reading of 111.6 and 10.4% above May of 2014. May was the ninth consecutive month the index had increased. The index is now at its highest level since April of 2006.
“The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,” said Lawrence Yun, NAR chief economist. “It’s very encouraging to now see a broad-based recovery with all four major regions showing solid gains from a year ago and new home sales also coming alive.”
However, Yun warned that short supply has caused home prices to rise at an unhealthy – and unsustainable – rate.
“Housing affordability remains a pressing issue, with home-price growth increasing around four times the pace of wages,” he said. “Without meaningful gains in new and existing supply, there’s no question the goalpost will move further away for many renters wanting to become homeowners.”
Pending home sales saw the biggest increase in the Northeast, with the PHSI rising 6.3% to 93.9, 10.6% above a year ago. In the West, the index rose 2.2% in May to 104.5, 13% above a year ago.
The index saw slight month-over-month declines in the Midwest and South, falling 0.6% and 0.8%, respectively. However, both regions posted year-over-year gains, with pending sales in the Midwest 7.8% above May of 2014 and pending sales in the South 10.6% above a year ago.
Pending home sales reached a nine-year high last month, according to new data from the National Association of Realtors.