A gauge of pending home sales jumped in May, the latest evidence that the U.S. housing recovery began to regain its footing this spring even if it isn't firing on all cylinders.
The National Association of Realtors' index tracking pending sales of existing homes rose a seasonally adjusted 6.1% in May from the prior month to 103.9, the group said Monday. It was the index's largest monthly gain since April 2010, when home sales spiked 9.6% ahead of the expiration of a tax credit for first-time buyers.
"It looks like May was a good month for home sales…and many of the housing indicators we track have pointed to a pickup in the housing market over the past few months following its recent earlier slump," J.P. Morgan Chase economist Daniel Silver said in a note to clients.
Economists surveyed by The Wall Street Journal had expected pending home sales to rise a more modest 1.1% in May. April's reading was raised slightly to 97.9 from the initial estimate of 97.8. The pending-sales index can be a timely measure of sales activity because it tracks home purchases when contracts are signed. Sales usually close a month or two later.
Pending sales have risen month-over-month for three straight months. But they still were down 5.2% in May from a year earlier.
"It is important to bear in mind that with mortgage applications for home purchase not showing any signs of sustained strength…it is apparent that much of the juice in the existing-home sales market remains centered in all-cash purchases by speculative buyers," MFR Inc. economist Joshua Shapiro said in a note to clients.
Still, the sign of strength in pending sales accompanies improvements in other gauges of U.S. housing-market activity, after they fell with last summer's jump in borrowing costs and slid through a harsh winter. Sales of new homes soared a seasonally adjusted 18.6% in May to their highest level in six years, the Commerce Department said. Sales of existing homes rose a seasonally adjusted 4.9%, according to the National Association of Realtors.
The Federal Reserve, however, has flagged sluggishness in the housing market as a concern for the overall economy. Longer-term readings on the housing market show new-home sales were up just 0.8% in the first five months of 2014 compared with a year earlier, and existing-home sales were down 5% in May from a year earlier.
Lawrence Yun, the National Association of Realtors' chief economist, said home sales are improving but the weak first quarter took a heavy toll. He expects 2.8% fewer sales of existing homes in 2014 compared with 2013.
"Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation," Mr. Yun said. "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."
Rahul and Smitha Ramchandani are a licensed real estate Broker-Salesperson/Sales Representative Team with Keller Williams in New Jersey. They are Buyer Specialists and Home Marketing Experts. You can reach Rahul and Smitha and their team online at: www.Morris-Homes.com or www.SRRealEstateGroup.com.
Their team specialize in North Central New Jersey including towns such as Boonton, Chatham, Madison,Chester,Convent Station, Denville, East Hanover, Florham Park, Hanover, Harding Twp., Mendham, Montville, Morristown,Morris Plains,Morris Twp., Mountain Lakes, Parsippany, Randolph, Rockaway, Whippany.
Their team specialize in North Central New Jersey including towns such as Boonton, Chatham, Madison,Chester,Convent Station, Denville, East Hanover, Florham Park, Hanover, Harding Twp., Mendham, Montville, Morristown,Morris Plains,Morris Twp., Mountain Lakes, Parsippany, Randolph, Rockaway, Whippany.
