Last Monday, June 29, the National Association of Realtors (NAR) reported an increase in the number of homes sales for the fifth consecutive month. This is based on the NAR's Pending Home Sales Index covering the month of May, which tracks contract signings for existing single-family homes, condos, and co-ops.
According to the Realtor, the NARs report shows that the Pending Home Sales Index has risen to a level of 112.6, marking a 0.9% increase in May and the fifth consecutive month of home sale gains. The level is 10% higher than in May 2014, and the highest level of activity since April 2006, when the index was at 113.7.
Realtor's chief economist Jonathan Smoke mentioned that the index represents an enormous increase in activity year on year, adding that the past spring is the "healthiest and best overall spring since the peak of the housing boom." Smoke further said, "Our report shows that the trends continued in June, which should lead to continued good news through June and into the summer."
The continued rise in pending sales suggests a healthy demand for homes, states Forbes. While builders are trying to meet the market's growing demand, the supply of houses is low. Two weeks ago, the U.S. Commerce Department announced that groundbreaking for new homes fell 11.1% in May compared to April, but building permits hit a new eight year high. And with the tight demand on supply, prices are increasing. According to NARs, sale of previously owned houses rose in May, with prices up by 7.9% year-over-year.
Lawrence Yun, NAR's chief economist said, "Housing affordability remains a pressing issue, with home-price growth increasing around four times the pace of wages. Without meaningful gains in new and existing supply, there's no question the goalpost will move further away for many renters wanting to become homeowners."
The report also showed a jump in home sales across the region, but were down in the Midwest and South. According to NAR, sales in the Northeast area rose 6.3% to 93.9, while in the West, the index rose 2.2% to 104.5. Meanwhile, the report marked a decline in the South and Midwest, decreasing 0.8% to an index of 127.8 and 0.6% to 111.4, respectively. But when tracked against year-on-year performance, all regions increased contract signing for the month of May: Northeast by 10.6%, Midwest by 7.8%, South by 10.6%, and West by 13%.
