The National Association of Realtors said Thursday that its seasonally adjusted index for pending home sales rose 0.3 per cent to 106. That's the highest since April 2010, when a homebuyer tax credit inflated sales.
Signed contracts have jumped 10.3 per cent in the past 12 months. There is generally a one- to two-month lag between a signed contract and a completed sale.
Home sales and prices began to recover last year and have been buoyed by steady job gains and low mortgage rates.
Sales of previously occupied homes rose in April to a seasonally adjusted annual rate of 4.97 million, a 3 1/2-year high. Sales of newly homes also rose in April, to nearly a five-year high.
Still, the supply of homes on the market remains low and that could keep sales from accelerating later this year. The number of available homes for sale rose in April, the Realtors' group said last week, but was still down 14 per cent from a year earlier.
Fewer homes for sale may be holding back sales in tight markets out West, such as Las Vegas and Phoenix. In those cities, many homeowners still owe more on their mortgages than their homes are worth.
The trend showed up in the April pending home sales report. Signed contracts to buy homes soared 11.5 per cent last month in the Northeast and 3.2 per cent in the Midwest. But they fell 7.6 per cent in the West and 1.1 per cent in the South.
Still, the tighter supply is also pushing up home prices. That could encourage more people to put their houses on the market. The Standard & Poor's/Case Shiller 20-city home price index this week said prices rose in March nearly 11 per cent over the past 12 months. That's the fastest pace in seven years.
And a limited supply of homes has made builders more willing to ramp up construction. Applications for building permits rose in April to the highest level in nearly five years.
Mortgage rates, meanwhile, jumped this week to their highest levels in a year. That means potential homebuyers are facing higher costs.
Still rates remain relatively low by historical standards. The average rate for a 30-year mortgage rose to 3.81 per cent, up from 3.59 per cent last week, according to mortgage buyer Freddie Mac. The record low of 3.31 per cent rate was reached in November.
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