Pending home sales bounced back in May, matching the highest level in the past two years, and are well above year-ago levels, according to the National Association of Realtors (NAR). Both monthly and annual gains were seen in every region. The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 5.9 percent to 101.1 in May from 95.5 in April and is 13.3 percent above May 2011 when it was 89.2. The data reflect contracts but not closings. The index also reached 101.1 in March, which is the highest level since April 2010 when buyers were rushing to beat the deadline for the first-time homebuyer tax credit.
“The housing market is clearly superior this year compared with the past four years. The latest increase in home contract signings marks 13 consecutive months of year-over-year gains,” said Lawrence Yun, NAR chief economist. “Actual closings for existing-home sales have been notably higher since the beginning of the year and we’re on track to see a nine to 10 percent improvement in total sales for 2012.”
The national median existing-home price is expected to rise three percent this year and another 5.7 percent in 2013.
The PHSI in the Northeast increased 4.8 percent to 82.9 in May and is 19.8 percent above May 2011. In the Midwest, the Index rose 6.3 percent to 98.9 in May and is 22.1 percent higher than a year ago. Pending-home sales in the South increased 1.1 percent to an index of 106.9 in May and are 11.9 percent above May 2011. In the West, the Index jumped 14.5 percent in May to 108.7 and is 4.8 percent stronger than a year ago.
“If housing starts do not rise in a meaningful way over the next two years due to the difficulty in getting construction loans, and barring an unexpected shift in the economy, the steady shedding of inventory could lead to shortages where home prices could get bid up close to 10 percent in 2013,” Yun said.
