Pending home sales overcame industry hurdles and increased for the third consecutive month in April, surging to the highest level in over a decade, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, hiked up 5.1% to 116.3 in April from an upwardly revised 110.7 in March and is now 4.6% above April 2015 (111.2).
After last month’s gain, the index has now increased year-over-year for 20 consecutive months.
Lawrence Yun, NAR chief economist, says vast gains in the South and West propelled pending sales in April to their highest level since February 2006 (117.4).
“The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets,” he said. “The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market.”
The boom even includes all major regions, with each one posting a gain in contract activity last month. The only exception is the Midwest, which saw a meager decline.
Broken up by region, the PHSI in the Northeast ticked up 1.2% to 98.2 in April, and is now 10.1% above a year ago.
Pending home sales in the South jumped 6.8% to an index of 133.9 in April and is 5.1% higher than last April, while the index in the West climbed 11.4% in April to 106.2, and is now 2.8% above a year ago.
In the Midwest, which posted the only drop, the index declined slightly (0.6%) to 112.9 in April, but is still 2.0% above April 2015.
Although the future of mortgage rates lies in question, Yun said, “Even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search.”
As it stands, mortgage rates have remained below 4% in 16 of the past 17 months, and Yun predicts that they will continue to hover around 4% in coming months.
Looking ahead, Yun expects sales this year to surge higher than earlier estimates, coming in around 5.41 million instead, a 3% boost from 2015. After accelerating to 6.8% a year ago, national median existing-home price growth is forecast to slightly moderate to between 4% and 5%.
Similarly, the most recent existing home sales managed to overcome today’s low-inventory environment and move higher for the second consecutive month, according to the National Association of Realtors.
“April’s rise continues an upward trend in the rate of home purchases. Despite rising prices and a shortage of listings in the many markets, buyer demand continues to hold strong. The year-over-year growth is encouraging to see as further proof that the economy continues to gain steam,” said Quicken Loans Vice President Bill Banfield about the existing home sales report.