After a month-to-month dip in April, pending sales of existing homes jumped back to a two-year high in May, according to the National Association of Realtors’ latest Pending Home Sales Index released today.
The index, which represents contracts signed but not yet closed, rose a seasonally adjusted 5.9 percent from April to May, to 101.1 — the same index level as in March and the highest index level since April 2010, when the deadline for a federal homebuyer tax credit program was fast approaching. The index was 111.3 then.
An index score of 100 is equal to the average level of sales contract activity in 2001, a year in which home sales fell in a range that’s considered "normal" for the current U.S. population. Contracts signed in May typically close one or two months later.
The index rose a non-seasonally-adjusted 15.3 percent in May compared to May 2011, marking the 13th straight month to see year-over-year increases.
"The housing market is clearly superior this year compared with the past four years," said Lawrence Yun, NAR’s chief economist, in a statement.
"Actual closings for existing-home sales have been notably higher since the beginning of the year and we’re on track to see a 9 to 10 percent improvement in total sales for 2012."
Regionally, the Midwest saw the biggest unadjusted year-over-year increase in pending sales: 22.7 percent. Month to month, pending sales in the region rose 6.3 percent on a seasonally adjusted basis, to 98.9.
The Northeast saw the second-biggest unadjusted year-over-year jump, 19.3 percent. On a monthly basis, the region saw a seasonally adjusted 4.8 percent rise, to 82.9 — the lowest index level among the four regions.
The index reached its highest level in the West: 108.7. That’s a 14.5 percent seasonally adjusted increase compared to April. On an unadjusted basis, pending sales were up 7.1 percent from a year ago.
In the South, pending sales rose 1.1 percent month to month, to 106.9, and 14 percent from the same time a year ago on an unadjusted basis.
NAR’s latest economic outlook, also out today, predicts a 9.5 percent jump in existing-home sales this year, to 4.66 million, followed by an estimated 6.9 percent increase in 2013, to 4.99 million. The trade group also anticipates new-home sales will rise 29 percent in 2012, to 388,000, and a whopping 62 percent in 2013, to 629,000.
NAR upped its forecasts this month for home prices. After falling 3.9 percent in 2011, the trade group expects a 3 percent increase in the median price of existing-home sales in 2012, to $171,100, and a further 5.7 percent increase, to $180,800, in 2013.
The association anticipates a 4 percent increase in the median price of new homes this year, to $234,900, and a 4.6 percent increase next year, to $245,800.
This year, NAR predicts the average interest rate for a 30-year fixed rate mortgage will be 3.9 percent, down from 4.7 percent in 2011. By 2013, the rate is expected to rise to 4.4 percent.
NAR expects this year’s national real gross domestic product to grow 2.2 percent, followed by 3 percent growth in 2013. The U.S. unemployment rate is expected to average 8.1 percent this year and drop to 7.5 percent in 2013.