By Ian McKendry
WASHINGTON (MNI) – Contracts signed to buy a home but not yet
closed rose in March, indicating that sales of existing-homes will
increase in April, the National Association of Realtors reported
Thursday.
“The housing market has clearly turned the corner,” NAR chief
economist Lawrence Yun said in a statement. “Rising sales are bringing
down inventory and creating much more balanced conditions around the
county, which means home prices will be rising in more areas as the year
progresses.”
The NAR’s pending home sales report, which tracks contract
signings, rose 4.1% in March to an index level of 101.4, the highest
since April, when it was 111.3 and is 12.8% above where it was in March
of last year. In addition, February was revised up to 97.4 from the
previously reported 97.0.
“First quarter sales closings were the highest first quarter sales
in five years,” Yun said, adding “the latest contract signing activity
suggests the second quarter will be equally good.”
The NAR reported last week that existing-homes sales fell 2.6% to
4.48 million SAAR, but still averaged 4.52 million for the quarter.
Senior economist at TD Securities Millan Mulraine said in a
research note, “Based on this report, our expectations is for the recent
weakness in existing home sales to end, with a modest up-tick in
existing sales activity expected in April.”
Senior economist at BMO Jennifer Lee made a similar observation in
a note to clients, saying that based on March’s pending home sales
report she expects existing-home sales will rise in April and there is a
possibility March could be revised up as well.
The U.S. Census Bureau said Wednesday in a joint release with the
Department of Housing and Urban Development that sales of new homes fell
7.1% to 328,000 in March, but some analysts suspect new home sales
declined because of inventory shortages rather than lack of demand.
The report showed there were 144,000 homes available for sale on a
seasonally adjusted basis in March, making it the lowest figure on
record.
An increase in housing demand seems logical as rents continue to
rise and buying a home remains very affordable for those who can obtain
credit.
Freddie Mac reported Thursday the average 30-year fixed rate
mortgage was 3.88% for the week ending April 26, and the Bureau of Labor
Statistics said rents increased 2.5% year-over-year in March.
The NAR also releases an “affordability index” which takes into
account median home prices, family incomes and average mortgage rates.
According to the most recent report published in March, affordability
reached an all-time high in January.
In addition, Fannie Mae in a report for March said “33% of
Americans expect home prices to increase over the next 12 months, up
from 28% in February.”
While the NAR’s latest pending home sales report is somewhat
positive the Federal Reserve Open Market Committee repeated Wednesday
that “despite some signs of improvement, the housing sector remains
depressed.”
** Market News International Washington Bureau: 202-371-2121 **
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