Pending Home Sales Reach Two-Year High

The National Association of Realtors reported Wednesday that contracts to purchase existing homes rose in May to their highest level in nearly two years, the latest in a series of positive indicators for the long-beleaguered US housing market. The NAR’s pending home sales index rose 5.9 percent last month to a reading of 1.1.1, exactly matching the index’s level since the expiration of the home buyer tax credit two years ago. The reading also represents a gain of nearly 13.3 percent on last year’s reading.

The rise in pending home sales is just the latest in a series of positive housing indicators, including new home sales reaching a two-year high, according to the Commerce Dept and the first increase in home price since the Fall, according to a report from Standard & Poor’s/Case-Shiller. Pending home sales gained in each of the four US regions, fueled by a gain of nearly 15 percent in the West. In year-to-year terms, pending sales rose 22 percent in the Midwest, 20 percent in the Northeast, 12 percent in the South and 5 percent in the West. Of course, despite recent improvements, the housing sector is still well below pre-recession levels, with sales and prices down by about a third since late 2007.

NAR chief economist Lawrence Yun indicated in a statement that he expects existing home sales to rise 9 to 10 percent this year and sees the median sales price for existing homes rising 3 percent this year and 5.7 percent in 2013. The median existing price has fallen at a faster rate than other home price measures because of the changing mix of homes included. In May, for example, distressed properties accounted for just a fourth of all existing homes sold, the lowest proportion since 2008.