U.S. Pending Home Sales Surge Up To Highest Level In A Decade

With the South and West seeing sharp increases, the National Association of Realtors released a report on Thursday showing that U.S. pending home sales jumped much more than expected in April to their highest level in a decade.

NAR said its pending home sales index surged up by 5.1 percent to 116.3 in April after climbing by 1.6 percent to an upwardly revised 110.7 in March. Economists had expected the index to increase by just 0.8 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the much bigger than expected increase, the pending home sales reached its highest level since hitting 117.4 in February of 2006.

NAR also noted the index is up by 4.6 percent compared to the same month a year ago, reflecting the twentieth consecutive month of year-over-year growth.

"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," said NAR chief economist Lawrence Yun.

He added, "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."

The jump in pending home sales was partly due to strength in the South and West, where pending sales shot up by 6.8 percent and 11.4 percent, respectively.

Pending home sales in the Northeast also climbed by 1.2 percent, while pending sales in the Midwest edged down by 0.6 percent.

NAR noted Yun expects existing home sales to climb above earlier estimates and reach around 5.41 million this year, reflecting a 3.0 percent jump from 2015

After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to moderate slightly to between 4 and 5 percent, NAR added.

On Tuesday, the Commerce Department released a separate report showing a sharp jump in new home sales in the month of April.

The report said new home sales surged up by 16.6 percent to an annual rate of 619,000 in April from a revised 531,000 in March.

Economists had expected new home sales to climb by 2.3 percent to a rate of 523,000 from the 511,000 originally reported for the previous month.

With the much bigger than expected increase, new home sales reached their highest level since hitting 627,000 in January of 2008.