Pending Home Sales Climb Again

The Pending Home Sales Index — a forward-looking indicator based on contracts signed — rose 6.7 in April from March, and was up 3.2 percent from April 2008, NAR announced today. It is the third consecutive month that pending sales showed gains, which NAR attributes to record low mortgage interest rates and lower home prices.

The index showed monthly gains in three of the nation’s four regions. In the Northeast, the index jumped 32.6 percent and was 0.8 percent above a year ago. It rose 9.8 percent in the Midwest and was 11.1 percent above April 2008. In the West, the index rose 1.8 percent in April but was 2.9 percent below a year ago. Pending sales remained flat in the South, slipping 0.2 percent during the month but was 3.5 percent higher than a year ago.

The Housing Affordability Index (HAI) also rose to the second highest monthly reading on record. The HAI is a broad measure used to illustrate the relationship between home prices, mortgage interest rates and family income. A family earning the median income of $60,900 could afford a home priced at $296,800 with a 20 percent down payment, assuming 25 percent of gross income is devoted to paying mortgage principal and interest, the study finds

NAR chief economist Lawrence Yun says the $8,000 first-time homebuyer tax credit is beginning to have an impact on the market. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers,” Yun says