Pending home sales improved for the second straight month in April, according to the National Association of Realtors (NAR). Gains in the Midwest and Northeast offset declines in the West and South. The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, increased 0.4 percent to 97.8 in April from 97.4 in March, but is 9.2 percent below April 2013 when it was 107.7.
“Higher inventory levels are giving buyers more choices, and a slight decline in mortgage interest rates this spring is raising prospective homebuyers’ confidence,” said Lawrence Yun, NAR chief economist. “An uptrend in closed sales is expected, although some months will encounter a modest setback.”
Yun projects the 30-year fixed-rate mortgage to trend up and average 5.5 percent next year.
The PHSI in the Northeast increased 0.6 percent to 79.3 in April, but is 12.0 percent below a year ago. In the Midwest the index rose 5.0 percent to 99.2 in April, but is 6.9 percent below April 2013. Pending home sales in the South slipped 0.6 percent to an index of 111.9 in April, and are 6.4 percent below a year ago. The index in the West declined 2.9 percent in April to 88.4, and is 15 percent below April 2013.
“The extent to which higher mortgage interest rates will impact housing affordability and sales depends on income growth, ongoing improvement in the labor market and any change to mortgage underwriting conditions,” said Yun.
With sub-par activity in the first quarter, annual existing-home sales are expected to be modestly below the nearly 5.1 million in 2013, but should be close to 5.3 million in 2015. The national median existing-home price is projected to grow between five and six percent this year, and in the range of four to five percent in 2015.
