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Pending home sales increased in May to the highest level since late 2006, suggesting a possible boost in sales as mortgage interest rates began to rise, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 6.7 percent to 112.3 in May from a downwardly revised 105.2 in April, and is 12.1 percent above May 2012 when it was 100.2. The data reflect contracts but not closings.
“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,” said Lawrence Yun, NAR chief economist. “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”
Contract activity is at the strongest pace since December 2006 when it reached 112.8, and pending sales have been above year-ago levels for the past 25 months.
Yun upgraded the price forecast for 2013, with the national median existing-home price expected to rise more than 10 percent to nearly $195,000. This would be the strongest increase since 2005 when the median increased 12.4 percent.
