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Home Sales Hit Best Pace in Over Nine Years

June 29, 2015
"The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring," said Lawrence Yun, NAR's chief economist.

WASHINGTON -- U.S. pending home sales rose for the fifth straight month in May, hitting the strongest annual pace in over nine years amid solid nationwide gains, an industry group said Monday.

The National Association of Realtors said that contracts signed for home purchases rose 0.9%, pushing up its pending home sales index to 112.6 in May from a slight downward revision of 111.6 in April.

Sales gains in the Northeast and West, by 6.3% and 2.2%, respectively, were offset by small dips in the Midwest and South.

Year-over-year, the pending home sales index climbed 10.4% to its highest level since April 2006, when the housing market was near the peak of a bubble.

Lawrence Yun, NAR's chief economist, said the robust number of contracts signed in May suggested that home sales were on track for their best year since the downturn.

"The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring," Yun said.

"It's very encouraging to now see a broad-based recovery with all four major regions showing solid gains from a year ago and new-home sales also coming alive."  

Pending home sales are a forward-looking indicator that leads home sales by one to two months.

Last week the Commerce Department reported sales of new single-family homes surged 2.2% in May to their highest pace in seven years amid post-recession pent-up demand that is helping tighten inventory on the housing market.

Yun warned that this year's stronger sales have caused home prices to rise to an unhealthy and unsustainable pace, while wage growth has been marginal.

"Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages," he said. 

"Without meaningful gains in new and existing supply, there's no question the goalpost will move further away for many renters wanting to become homeowners."

Copyright Agence France-Presse, 2015

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