Pending home sales rose for the third consecutive month in April and reached their highest level in over a decade, based on the National Association of Realtors® (NAR). All major regions saw gains in contract activity last month with the exception of the Midwest, which saw a meager decline.
Reports say Pending home sales are at a 10-year high
The Pending Home Sales Index – a forward-looking indicator based on contract signings for homes that have not yet sold – hiked 5.1 % higher to 116.3 in April from an upwardly revised 110.7 in March. Year-to-year, it’s 4.6 % above April 2015 (111.2).
After last month’s gain, the index has now increased year-over-year for 20 consecutive months. Vast gains within the South and West propelled April’s pending sales in April to its highest level since February 2006 (117.4), says Lawrence Yun, NAR chief economist.
“The ability to sign a contract on a home is slightly exceeding expectations this spring, even with the affordability stresses and inventory squeezes affecting buyers in a number of markets,” Yun says. “The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market.”
Rates on mortgages have remained below 4 % in 16 of the past 17 months, but Yun says it remains to be seen just how long they are going to stay this low. In addition to rent growth, rising gas prices – and the fading effects of last year’s cheap oil on consumer prices – could edge up inflation and push rates higher. For now, Yun foresees mortgage rates continuing to hover around 4 % in coming months, but inflation may potentially surprise the marketplace and cause rates to raise suddenly.
“Even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search,” adds. Yun.
Following the housing market’s best first quarter of existing-sales since 2007 (5.66 million) along with a decent increase (1.7 %) in April, Yun expects sales this year to climb above earlier estimates and be around 5.41 million – a 3.0 percent boost from 2015. After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to between 4 and 5 %.
Pending sales in the Northeast climbed 1.2 percent to 98.2 in April, and are now 10.1 percent above a year ago. In the Midwest, the index declined slightly (0.6 %) to 112.9 in April, but it’s still 2.0 percent above April 2015.
Pending home sales in the South jumped 6.8 percent to an index of 133.9 in April – 5.1 percent higher than last April. The index in the West soared 11.4 % in April to 106.2, and it is now 2.8 percent over a year ago.
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