Pending home sales rose for the third consecutive month in April, reaching their highest level in over a decade. According to the National Association of REALTORS, all major regions experienced an increase in contract activity aside form the Midwest.
The Pending Home Sales Index went up to 116.3 in April from an upwardly revised 110.7 in March. It is now 4.6 percent higher than it was in April of 2015.
A chief economist with the NAR reported vast gains in the South and West most likely influenced pending sales in April to reach their highest level since 2006. The building momentum from the 14 million jobs created since 2010 couples with the soaring rents in most cities and low mortgage rates are bringing more interested buyers to the table.
Speaking of mortgage rates – which have remained below 4 percent from the past 16 months – there is much speculation about the longevity of this trend. Rent growth and rising gas prices could edge up the rates. For now however, they are projected to hover around 4 percent.
Even if rates do rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers a suitable number of affordable choices.
After the housing market’s best first quarter since 2007, sales this year are expected to come in around 5.41 million, a 3 percent boost from 2015.
Pending Home Sales Index by Region
Northeast: Increased 1.2% to 98.2 – 10.1 percent more than a year ago
Midwest: Decreased 0.6% to 112.9 – 2.0 percent higher than a year ago
South: Increased 6.8% to 133.9 – 5.1 percent higher than a year ago
West: Increased 11.4% to 106.2 – 2.8 percent higher than a year ago
This report represents a boom in the housing market, and a solid foundation as the spring buying season ramps up. If this growth continues, 2016 could be the best year for the real estate market in a decade.