Pending Existing Homes Sales Up by 8.2%June 29, 2011
The number of pending home sales for previously owned U.S. homes rose a surprising 8.2 percent from April, and 16 percent from May 2010, as falling prices made properties more affordable.
The increase is almost three times as much as forecasted and followed a revised 11 percent drop in March, according to the National Association of Realtors.
Even with a decline in home prices, 9.1 percent unemployment and stringent loan terms are still holding back buyers.
“The market for existing homes is still extremely weak,” said economist Patrick Newport with IHS Global Insight. “Existing-home sales will probably improve in June based on this reading, but probably not a lot.”
A June report from the National Association of Realtors showed sales of previously owned homes, which make up about 96 percent of the market, dropped in May to the lowest level in six months. According to NAR Chief Economist Lawrence Yun, the rate of purchases of previously owned homes in May, which were at a six-month low, will probably be “the low point of the year.”
Purchases of existing homes are tabulated when a sale closes, typically a month or two later. Following the NAR June report, Yun told reporters that home sales should begin to rebound in coming months and that the index of pending sales, based on not-yet-complete data, might show an increase of about 15 percent for May.
The index “is telling us that the market for existing homes is still extremely weak,” according to Newport, the May gain “only looks good because the prior month was bad.”