The pending home sales index, a leading indicator for the housing sector, rose 6.7% in April from March and 3.2% from a year ago, the National Association of Realtors [NAR] said today in Washington. The rise in the index was the fourth increase in five months and the largest monthly jump since 2001.
From NAR: Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions… [But, he] cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
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The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
NAR also said its Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record.
While it may still be premature to convincingly state the housing market has reversed, today’s report suggests that the bottom has to be even closer now.
