Home sales are off to their best year since before the financial collapse, according to the National Association of Realtors.
According to the association’s Pending Home Sales Index (PHSI), a predictor of housing market activity based on contract signings, contract activity rose again in May for the fifth straight month and is at its highest level since April 2006.
Contract activity in the Northwest and West is particularly healthy, but is offset by small decreases in the Midwest and South, NAR said:
- The PHSI in the Northeast increased 6.3 percent to 93.9 in May, and is now 10.6 percent above a year ago.
- In the Midwest, the index declined 0.6 percent to 111.4 in May, but is still 7.8 percent above May 2014.
- Pending home sales in the South decreased 0.8 percent to an index of 127.8 in May, but are still 10.6 percent above last May.
- The index in the West rose 2.2 percent in May to 104.5, and is 13 percent above a year ago.
Lawrence Yun, NAR’s chief economist, said contract activity rose again in May for the fifth straight month, increasing the likelihood that home sales are off to their best year since the downturn.
“The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,” said Yun. “It’s very encouraging to now see a broad-based recovery, with all four major regions showing solid gains from a year ago and new-home sales also coming alive.”
However, Yun warned that this year’s stronger sales, coupled with flat housing supply levels, have caused home prices to rise to an unhealthy and unsustainable pace.
“Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages,” he said. “Without meaningful gains in new and existing supply, there’s no question the goalpost will move further away for many renters wanting to become homeowners.”
Median lists prices are increasing, according to Realtor.com. Based on data for the first three weeks of June, the median list price increased to $233,000, a 7 percent increase over the same period last year, and a 2 percent increase over May.
The time a house sits on the market is down, with homes spending a median of 66 days on the market in June, a 7 percent decrease over June 2014, but flat compared to May. Listings inventory increased by 4 percent since May, but inventory is still down compared to the same period last year.
More prospective buyers are spending time searching for available homes, according to realtor.com’s data. The association said that visits and searches on realtor.com set new highs in June and were up 50 percent and 30 percent, respectively. The website also saw 40 percent growth in unique users compared to June 2014.
Realtor.com’s Hotness Index also identified the top medium- to large-sized U.S. markets where buyers are eagerly seeking homes and sales are closing quickly. California had almost half of the country’s 20 hottest real estate markets.
Four Texas cities made the list: Dallas, Midland, Austin and San Antonio. Denver is still in the top three. Michigan is represented twice on the list, with Ann Arbor and Detroit both climbing in the rankings.
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