Pending Home Sales Drop Monthly But Report Large Annual Gains
Pending home sales for April dropped 5.5% from March to a score of 95.5, but is still 14.4% higher than April 2011. The latest decline followed a three-month consecutive gain. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said a one-month setback in light of many months of gains does not change the fundamentally improving housing market conditions. “Home contract activity has been above year-ago levels now for 12 consecutive months. The housing recovery momentum continues,” he said.
Yun notes home sales are staying well above the levels seen from 2008 through 2011. “Housing market activity has clearly broken out at notably higher levels and is on track to see the best performance since 2007,” he said. “All of the major housing market indicators are expected to trend gradually up, but a new federal budget must be passed before the end of the year for the economy to continue to move forward.”
By region, the Pending Home Sales Index rose in the Northeast (+0.9%) from March while all other regions posted declines. The Midwest’s index dropped 0.3%, followed by the South (down 6.8%) and the West (down 12%). However low the monthly changes were, all four regions posted annual increases.
The National Association of Realtors report, “The housing forecast has been upgraded, with existing-home sales expected to reach 4.66 million this year, compared with 4.26 million in 2011. The outlook for 2013 is now 4.92 million, but could vary significantly depending on two scenarios. If lending returns to normal, the 2013 outlook for existing-home sales would measurably improve to 5.3 million. However, a fiscal cliff scenario of higher taxes and sharp spending cuts beginning in early 2013, which is an unlikely event but still worth noting, would lower the sales projection to 4.5 million.”
Home prices are estimated to increase 2-3% in 2012 and 4-5% in 2013. “The diminishing share of distressed properties is another reason for higher home prices in upcoming months,” Yun added.
Source: National Association of Realtors