Pending home sales jumped 6.1% in May.
This was much stronger than the modest 1.2% expected.
April’s growth rate was revised up to 0.5% from 0.4%.
“Sales should exceed an annual pace of five million homes in some of the upcoming months behind favourable mortgage rates, more inventory and improved job creation,” said the National Association of Realtors’ Lawrence Yun. “However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”
Here’s more from Yun:
“The flourishing stock market the last few years has propelled sales in the higher price brackets, while sales for homes under $US250,000 are 10 per cent behind last year’s pace. Meanwhile, apartment rents are expected to rise 8 per cent cumulatively over the next two years because of tight availability … Solid income growth and a slight easing in underwriting standards are needed to encourage first-time buyer participation, especially as renting becomes less affordable”
According to the NAR, this is “the largest month-over-month gain since April 2010 (9.6 per cent), when first-time home buyers rushed to sign purchase contracts before a popular tax credit program ended.”
“New home sales jumped higher in May while mortgage purchase applications edged up,” noted Bank of America Merrill Lynch economists. “The combination of the increase in supply of existing homes and lower mortgage rates should support sales of existing properties.”