Suggesting a possible spark from rising mortgage rates, the National Association of Realtors released a report on Thursday showing that pending home sales surged up to their highest level in over six years in the month of May.
NAR said its pending home sales index jumped 6.7 percent to 112.3 in May after dipping 0.5 percent to a downwardly revised 105.2 in April. Economists had been expecting the index to rise by about 1.0 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.
With the bigger than expected increase, the pending home sales index reached its highest level since hitting 112.8 in December of 2006. NAR noted that the index was up 12.1 percent year-over-year.
Lawrence Yun, NAR chief economist, said, "Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher."
"This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand," he added.
The bigger than expected increase in pending home sales reflected strong growth in the West and Midwest, where pending home sales jumped 16.0 percent and 10.2 percent, respectively.
Pending home sales in the South increased by a more modest 2.8 percent, while pending home sales in the Northeast came in unchanged.
NAR said existing home sales are projected to increase 8.5 to 9.0 percent in 2013, reaching about 5.07 million, the highest in seven years.
On Tuesday, the Commerce Department released a report showing that new home sales rose by more than expected in the month of May.
The report said new home sales climbed 2.1 percent to a seasonally adjusted annual rate of 476,000 in May from the revised April rate of 466,000.
Economists had been expecting new home sales to edge up to an annual rate of 460,000 from the 454,000 originally reported for the previous month.
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