Washington — More Americans signed contracts to purchase homes in May, as pending sales climbed to their highest level in more than nine years.
The National Association of Realtors said Monday that its seasonally adjusted pending home sales index rose 0.9 percent to 112.6 last month. The index has increased 10.4 percent over the past 12 months, putting it just below the April 2006 level — which was more than a year before the housing bust triggered the Great Recession.
The steady job growth coupled with low but rising mortgage rates has created greater urgency to buy homes. The gains reflect a stronger economy but also the pressures to purchase a home before both prices and borrowing costs become unaffordable.
Completed sales of existing homes jumped 5.1 percent last month to a seasonally adjusted annual rate of 5.35 million, the Realtors said last week. Median home prices climbed 7.9 percent over the past 12 months to $228,700, about $1,700 shy of the July 2006 peak.
The number of signed contracts increased in the higher-priced Northeast and West markets last month, while dipping in the Midwest and South.
Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.
Employers have added 3.1 million jobs over the past 12 months, as the six-year recovery is finally generating the momentum to sustain job growth at a pace that is boosting home sales.
Relatively low mortgage rates have aided the real estate market. But those same rates have increased in recent weeks, potentially causing more would-be buyers to close sales before higher rates hurt their ability to purchase a home.
Average rates for a 30-year fixed-rate mortgage were 4.02 percent last week, up slightly from 4 percent in the prior week, according mortgage giant Freddie Mac. The average has risen from a 52-week low of 3.59 percent.
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