Pending home sales showed modest growth for the second straight month in April, but they remain slightly more than 9% below what they were a year ago, according to the National Association of Realtors.
NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, reported sales increased 0.4% in April from March, but declined 9.2% when compared to April 2013 levels.
Despite the yearly dip, NAR Chief Economist Lawrence Yun expects a gradual uptrend in home sales.
“Higher inventory levels are giving buyers more choices, and a slight decline in mortgage interest rates this spring is raising prospective home buyers’ confidence,” said Yun in a statement. “An uptrend in closed sales is expected, although some months will encounter a modest setback.”
Geographically, the nation is split with pending home sales gains in the Midwest and Northeast offsetting declines in the West and South.
Looking at the broader picture nationally, pending home sales for April were below their year-ago 2013 levels across all regions, but some posted modest gains on a monthly basis while others reported both yearly and monthly declines.
In the Northeast, pending sales rose 0.6%, but remain 12% below a year ago, while in the Midwest sales rose 0.5% month-over-month and remain 6.9% below their April 2013 level.
Pending home sales in the South slipped only 0.6% in April and are 6.4% below a year ago, while the West reported a monthly decline of 2.9% and are 15% below April 2013.
Sub-par activity in the first quarter of 2014 has NAR expecting annual existing-home sales to be modestly below the nearly 5.1 million reported in 2013, but should be close to 5.3 million in 2015.
Additionally, NAR projects the national median existing-home price to grow between 5% and 6% this year, and in the range of 4% to 5% in 2015.
The 30-year fixed-rate mortgage is also projected to trend upwards and average 5.5% next year, however, restrictions may apply when it comes to affordability.
“The extent to which higher mortgage interest rates will impact housing affordability and sales depends on income growth, ongoing improvement in the labor market and any change to mortgage underwriting conditions,” Yun said.
Written by Jason Oliva