April Pending Home Sales Hit 10-Year High

Pending home sales rose for the third consecutive month in April, blasting to their highest level in more than a decade, the National Association of Realtors said yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, jumped by 5.1 percent to 116.3 in April from an upwardly revised 110.7 in March, the 20th consecutive monthly gain, and is now 4.6 percent higher than a year ago (111.2).

All regions saw gains in contract activity last month except for the Midwest, which declined by 0.6 to 112.9, but improved by 2 percent from a year ago. In the Northeast, the index rose by 1.2 percent to 98.2 and by 10.1 percent from a year ago. Pending sales in the South jumped by 6.8 percent to 133.9 in April and by 5.1 percent from a year ago, while the West soared by 11.4 percent to 106.2, and is now 2.8 percent above a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the continued pickup in pending home sales indicates the spring home buying season is off to a solid start.

“April’s pending home sales and new home sales, which both represent signed contracts, likely benefited from this year’s early Easter,” Vitner said. “With Easter occurring in March, April effectively had one more weekend of sales, and this extra activity looks even better after seasonal adjustment. Even with this boost, however, the rise in home sales reflects real economic gains and underscores the improving housing outlook.”

NAR Chief Economist Lawrence Yun said strong 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,” he said. “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.”

Yun added that even with projected increases in mortgage rates, “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.”