The Pending Home Sales Index jumped 6.7% to 112.3 for May, according to a National Association of Realtors (NAR) report released today.
After dipping a revised 0.5% in April, analysts had expected a slight 1% increase. According to the report, pending home sales are at their highest level since December 2006. Pending sales have been above year-ago levels for the past 25 months.
The index is based on contract signings (with sales usually finalized one or two months later) and is benchmarked to 2001 contract activity. (An index of 100 is equal to the average level of contract activity during 2001, which was the first year the association examined data).
Lawrence Yun, NAR chief economist, points to rising mortgage rates as a reason for the housing rush. "Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher," Yun said in a statement today. "This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand."
Looking ahead, the NAR expects the median existing-home price to clock in at nearly $195,000 for 2013, 10% higher than the previous year. Existing-home sales are expected to increase 8.5% to 9.0% for the year. If that prediction turns out to be true, 2013 sales would hit a seven-year high.