The National Association of Realtors (NAR) seasonally adjusted pending home sales index improved significantly – and reached their highest level in over a decade. Our analysis of pending home sales is not as positive as the NAR’s, but we are forecasting relatively good May home sales. The quote of the day from this NAR release:
… 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 …
Pending home sales are based on contract signings, and existing home sales are based on the execution of the contract (contract closing).
The NAR reported:
- Pending home sales index was up 5.1 % month-over-month and up 4.6 % year-over-year.
- The market was expecting month-over-month growth of 0.0 % to 1.2 % (consensus 0.8 %) versus the growth of 5.1 % reported.
Econintersect‘s evaluation using unadjusted data:
- the index growth was down 0.3 % month-over-month and up 2.9 % year-over-year (same as last month).
- The current trends (using 3 month rolling averages) are improving and remains in expansion.
- Extrapolating the pending home sales unadjusted data to project May 2016 existing home sales, this would be a 10.5 % expansion year-over-year for existing home sales.
Unadjusted 3 Month Rolling Average of Year-over-Year Growth for Pending Home Sales (blue line) and Existing Home Sales (red line)
z pending2.png
From Lawrence Yun , NAR chief economist:
…. vast gains in the South and West propelled pending sales in April to their highest level since February 2006 (117.4). 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 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.
