April Pending Home Sales Reach 10-Year High

The National Association of Realtors (NAR) Wednesday morning released its data on pending sales of existing homes for April. The pending home sales index rose 5.1 points to 116.3, from an upwardly revised March reading of 110.7. The April reading is also up 4.6% year over year.

April sales in the West and South pushed the overall index to its highest monthly level since February of 2006, when the index reached 117.4.

The consensus estimate called for a month-over-month increase of 0.5% in pending sales to a reading of 109.1. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.

The index has been above 100 (the “average” reading) for 20 straight months.

The NAR’s chief economist noted:

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. 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. … Even if [mortgage] 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.

2016 existing home sales are now forecast rise about 3% to around 5.41 million, up from a pace of 5.34 million in 2015. The national median existing home price for all of this year is expected to rise by 4% to 5%. In 2015, existing home sales rose 6.3% and prices rose 6.8%.

By region, April pending home sales increased by 1.2 points to an index score of 98.2 in the Northeast, 10.1% higher than in April of 2015. In the South, sales jumped 6.8% to an index score of 133.9, up 5.1% compared with the April 2015 index.

Sales soared by 11.4% in the West to an index score of 106.2, and they are now up 2.8% compared with April 2015. Sales in the Midwest declined by 0.6% to an April index score of 112.98, now 2% higher than April 2015.