Pending Home Market Sales Up? The home market is being field with optimism as contracts to purchase previously owned U.S. homes matched a two-year high in May, with pending sales that could be a sign of recovery.
The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, rose 5.9 percent to 101.1. The index level matched the two-year high reached in March, while the gain was the largest since October 2011.
Before March, the last time pending home sales were as high was April 2010 when buyers were rushing to beat the deadline for a home-buyer tax credit, which was about to expire, the NAR said.
“The housing market is clearly superior this year compared with the past four years,” Lawrence Yun, NAR chief economist said in a statement. “We’re on track to see a 9 to 10 percent improvement in total sales for 2012.”
However, low inventory could hold back some contract activity. The problem is with credit conditions, which need to be returned to normal, especially in lower price ranges. Some financial analysts say we’re not out of the woods yet when it comes to the housing marketing.
Low inventory results partly from underwater homeowners who are unwilling to list their homes, which would require a lengthy short sale process, or additional cash to complete the transaction.
NAR estimates 85 percent of homeowners have positive equity, with 15 percent in an underwater situation.
“Low inventory can be cured by increasing new home construction,” Yun said. He projects housing starts to rise by 26 percent this year and another 50 percent in 2013.