Reports said that the National Association of Realtors Pending Home Sales Index, based on contracts signed in April and seen as a key barometer of future housing activity, increased 6.3 percent to 88.2 from an unrevised 83.0 in March. Despite the increase, sales were 13.1 percent below year-ago levels. A real estate trade group's report on Monday showed that pending sales of previously owned U.S. homes rose in April to the highest level in six months as foreclosed properties flooded the market and drove prices sharply lower.
But conditions in the labor market deteriorated in May and will continue to do so, a separate report from the New York-based Conference Board on Monday showed.
Lawrence Yun, the National Association of Realtors' chief economist said, "Bargain hunters have entered the market en masse, especially in areas that have seen double-digit price declines," He also added that regions of the country that have seen sharp price declines, such as the West, are now seeing a sales recovery. Economists polled by Reuters before the report were expecting pending home sales to decline 0.5 percent.
U.S. Treasury debt prices fell on Monday after the surprising jump in April pending home sales, while the Dow Jones industrial average and the Standard & Poor's 500 Index were up, helped by a pullback in oil prices of nearly $3 a barrel.
Christopher Low, chief economist at FTN Financial in New York, said, "We are seeing acceleration in foreclosures. As foreclosures have taken off, they put pressure on prices. Banks have become more aggressive with sales on homes they have foreclosed." In the West, the biggest trouble spot hit by the subprime mortgage crisis, pending sales rose 8.3 percent in April and they were up 4 percent from a year ago. Pending sales rose also in the Midwest and the South, but they were down in the Northeast.
FTN's Low said the pickup in pending home sales could be a sign that the housing market could soon be stabilizing. "Sales will stabilize in the next few months and that will set the stage for inventories turning to normal sometime next year and maybe even for prices to appreciate a bit," he said.
The median home price fell 8 percent in April from a year earlier, according to a report from the National Association of Realtors last month, which was the second-largest price decline on record. "For now, prices will continue to fall. There is still an inventory overhang that will take 18 months to work through. The end game of the housing bust is near."
Some economists said the unexpected rise in pending home sales could be the result of statistical reporting issues being disrupted from an earlier-than-usual Easter holiday week. High Frequency Economics' chief economist Ian Shepherdson, who expects the May data will reflect a sharp drop said, "The exceptionally early Easter meant that all the holiday disruption was in March, so April had more selling days than usual."
Jron Magcale
http://miamirealestatesearch.org/
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