Contracts to buy existing homes rose for a fourth consecutive month in April, climbing to the highest level since May 2006 as the underlying trend continued to show the housing market was gaining momentum.
The pending home sales index, a forward-looking indicator of US home sales, rose 3.4 percent to 112.4 in March following an upward revision in February, the National Association of Realtors reported today. The median estimate of economists called for an increase of 1 percent.
Compared to April 2014, contracts to buy existing homes were up 14 percent. That was the eighth consecutive month pending home sales were above year-ago levels.
April was also the twelfth consecutive month the pending home sales index was above 100.0, which represents the average level of contract activity.
“Realtors are saying foot traffic remains elevated this spring despite limited — and in some cases severe — inventory shortages in many metro areas,” said NAR chief economist Lawrence Yun in a statement. “Homeowners looking to sell this spring appear to be in the driver’s seat, as there are more buyers competing for a limited number of homes available for sale.”
Adds Yun, “As a result, home prices are up and accelerating in many markets.”
Last week the NAR said existing home sales declined unexpectedly in April, but remained close to 18-month highs. Existing home sales tumbled 3.3 percent to a seasonally adjusted 5.04 million.
Earlier this week the Commerce Department said new home sales rebounded more than forecast in April, climbing 6.8 percent to a seasonally adjusted annual rate of 517,000.
Home sales are being buoyed by a stronger labour market, which is encouraging first time buyers to enter the market. On Thursday the Labor Department said initial jobless claims remained below 300,000 for the twelfth consecutive week, underscoring the labour market’s recovery.
Favourable mortgage rates are also supporting a sustained increase in sales, with the average commitment rate on a 30-year fixed rate mortgage averaging 3.84 percent last week, according to Freddie Mac. Rates averaged 3.67 percent in April, well below year-ago levels of 4.34 percent.