Pending home sales in the U.S. unexpectedly showed a notable decrease in the month of April, according to a report released by the National Association of Realtors on Wednesday, with the drop coming after three consecutive monthly gains.
NAR said its pending home sales index tumbled 5.5 percent to 95.5 in April after rising 3.8 percent to a downwardly revised 101.1 in March. The drop by the index surprised economists, who had expected pending home sales to edge up by 0.5 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Despite the sharp monthly pullback by the pending home sales index, NAR noted that the index is up by 14.4 percent compared to April of 2011.
In light of the increases seen in many of the previous months, Lawrence Yun, NAR chief economist, said the one-month setback does not change the fundamentally improving housing market conditions.
"Home contract activity has been above year-ago levels now for 12 consecutive months," Yun said. "The housing recovery momentum continues."
The monthly drop reflected notable decreases in pending home sales in the West and the South, where pending sales fell by 12.0 percent and 6.8 percent, respectively.
Pending home sales in the Midwest edged down by a much more modest 0.3 percent, while pending sales in the Northeast crept up by 0.9 percent.
Looking ahead, NAR upgraded its housing forecast, saying it now expects existing home sales to reach 4.66 million in 2012 compared with 4.26 million in 2011.
The group also forecast 4.92 million existing home sales in 2013, although it said the outlook could vary significantly depending on whether lending returns to normal and whether the market faces the fiscal cliff scenario of higher taxes and sharp government spending cuts.
Additionally, NAR upwardly revised its forecast for home prices, with the median existing home price now projected to rise 2 to 3 percent this year and 4 to 5 percent in 2013.
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