Pending home sales in May hit their highest level since December 2006, the National Association of Realtors (NAR) reported today.
“Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” said Lawrence Yun, chief economist at NAR. “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”
Pending home sales, a forward-looking indicator based on contracts signed to purchase homes, increased 6.7 percent month over month in May, and were up 12.1 percent from a year ago, according to NAR’s Pending Home Sales Index.
In response to the jump in contract signings, Yun raised his home price forecast for 2013. The economist now predicts that the median existing-home price will rise by more than 10 percent to $195,000. That would be the strongest increase since 2005, when the median price rose by 12.4 percent, NAR said.
The sunny news accompanies a murkier report released by Freddie Mac today that found that mortgage interest rates spiked by their largest weekly margin in 26 years on news that the Federal Reserve could soon begin to taper its stimulus program. Source: NAR