Pending home sales hit their highest level in nine years in April, a sign that last month’s sales decline for existing homes may be only temporary.
The National Association of Realtors’ Pending Home Sales Index, which is based on contract signings, jumped to 112.4 in April, rising for the fourth consecutive month. That’s its highest level since May 2006. All four regions of the country saw more contract signings in April, led by the Northeast and Midwest.
“Realtors are saying foot traffic remains elevated this spring despite limited — and in some cases severe — inventory shortages in many metro areas,” said NAR Chief Economist Lawrence Yun. “Homeowners looking to sell this spring appear to be in the driver’s seat, as there are more buyers competing for a limited number of homes available for sale.
“As a result, home prices are up and accelerating in many markets.”
There’s a limit, however, as to how high prices can go since mortgage interest rates are beginning to rise.
“The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers — especially first-time buyers — are able to obtain a mortgage,” Yun said.
By: Kent Hoover