Pending home sales increased in May to the highest level in over six years, indicating a potential spark as mortgage interest rates began to rise, according to the National Association of REALTORS®.
The Pending Home Sales Index is a leading indicator of home sales based on contract signings, and it increased by 6.7 percent to 112.3 in May from 105.2 in April, and is 12.1 percent above May 2012 when it was 100.2. Contract activity is at its strongest pace since December 2006, when it reached 112.8. In addition, pending sales have now been above year-ago levels for 25 consecutive months.
Lawrence Yun, NAR chief economist, said there may be a fence-jumping effect. “Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” he said. “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”
Source: NAR
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