After an April dip, pending home sales rose sharply in May, for the first annual increase in over a year, according to a report from the National Association of Realtors.
NAR’s Pending Home Sales Index rose 8.2 percent month-to-month and 13.4 percent year-over-year in May, to 88.8. An index score of 100 is the average level of contract activity in 2001, the first year that index data was collected. May saw the first year-over-year index increase since April 2010, NAR said.
The index, which tracks homes under contract, is a leading indicator, and the latest data suggest home sales will jump in June and July.
"Absorption of inventory is the key to price improvement," said Lawrence Yun, NAR’s chief economist.
He cautioned, however, that "the job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country."