Pending home sales spike in May

by Ryan Smith | Jul 01, 2014

 

Pending home sales were up sharply in May, according to data released by the National Association of Realtors.

The NAR’s Pending Home Sales Index rose 6.1% in May to a level of 103.9, the largest month-over-month increase since April of 2010. That’s still 5.2% below the index’s May 2013 reading of 109.6, however.

NAR chief economist Lawrence Yun expects home sales to improve further in the second half of the year.

“Sales should exceed an annual pace of 5 million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation,” Yun said. “However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”

Yun also said that access to credit and affordability were still problems for first-time buyers, who accounted for only 27% of existing home sales last month.

“The flourishing stock market the last few years has propelled sales in the higher price brackets, while sales for homes under $250,000 are 10% behind last year’s pace,” Yun said. “Meanwhile, apartment rents are expected to rise 8% cumulatively over the next two years because of tight availability. Solid income growth and a slight easing in underwriting standards are needed to encourage first-time buyer participation, especially as renting becomes less affordable.”