Pending home sales continued to rise in May and are now at their highest level in over nine years, according to the National Association of Realtors®. Gains in the Northeast and West were offset by small decreases in the Midwest and South.
The Pending Home Sales Index is a forward-looking indicator based on contract signings. The PHSI climbed 0.9% to 112.6 in May from a slight downward revision of 111.6 in April and is now 10.4% above May 2014 (101.9). The index has now increased year-over-year for nine consecutive months and is at its highest level since April 2006 (113.7).
Lawrence Yun, NAR chief economist, says the contract activity in May increased the likelihood that home sales are off to 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,” said Yun. “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.”
Injecting a note of caution, however, Yun said the inventory shortage is pushing prices to “unsustainable” levels.