With lower mortgage rates and increased inventory accelerating the market, the National Association of Realtors released a report on Monday showing that pending home sales rose by much more than anticipated in the month of May.
NAR said its pending home sales index jumped 6.1 percent to 103.9 in May from 97.9 in April, while economists had expected 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.
While the jump in May reflected the biggest monthly increase since April of 2010, the pending home sales index remains down by 5.2 percent compared to the same month a year ago.
Lawrence Yun, NAR chief economist, said, "Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation."
"However, second-half sales growth won't be enough to compensate for the sluggish first quarter and will likely fall below last year's total," he added.
The monthly increase in pending home sales reflected notable growth in all four regions of the country.
The Northeast saw a particularly strong 8.8 percent increase in pending home sales, while pending sales in the West rose by 7.6 percent.
Pending home sales in the Midwest and South also increased by 6.3 percent and 4.4 percent, respectively.
Looking ahead, Yun forecast existing-homes sales to be down 2.8 percent to 4.95 million in 2014 compared to 5.1 million in 2013.
The national median existing-home price is projected to grow between 5 and 6 percent this year and in the range of 4 to 5 percent in 2015, NAR said.
by RTT Staff Writer
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