May used home contracts match 2 year high
There seems little doubt that the housing market is gaining ground, even as the job market continues to stumble. The National Association of Realtors said Wednesday that the number of contracts signed to buy previously occupied homes in May matched the two-year high seen in March.
Matches March 2-year high
The NAR said its Pending Home Sales Index rose 5.9 percent in May, matching March’s two-year high of 101.1. A reading of 100 is considered healthy.
May’s rise was also the largest monthly increase seen on the Index since last October. April’s drop to 9.5 percent appears to have been a momentary fluke.
March’s total, matched in today’s report, was the highest since April 2010. That previous high was driven by a federal home-buyer’s tax credit. The index tanked at 75.88 in June of that year, after the tax break expired.
Lawrence Yun, NAR chief economist wrote:
“The housing market is clearly superior this year compared with the past four years. We’re on track to see a nine to 10 percent improvement in total sales for 2012.”
There is generally a lag of one to two months between the time a contract is signed and the time the deal is completed. Wednesday’s report suggests a growing housing market thorough the rest of the summer at the least.
Millan Mulraine, a senior U.S. strategist at TD Securities, said:
“This improvement adds to the recent flow of good news on the housing sector, reinforcing our view that this beleaguered sector is finally on the mend.”
The NAR’s finding is only the most recent indicator of a modest increase in the housing market. Fewer troubled mortgages were also seen by lenders in the first three months of the year, according to a Wednesday report by the Office of the Comptroller of the Currency.
The nation’s number of foreclosures has gone down by 8.1 percent since March of 2011. However, the number of mortgages in the process of foreclosure went up by 2.3 percent over the last 12 months.
Home prices rise
Tuesday, we reported that home prices have gone up in 19 of the 20 major markets tracked by the Standard & Poor’s/Case-Shiller Home Price Index. The rise in prices indicates increased demand in the housing market.
Job market still founders
The recovering housing market is a good sign, but if not accompanied soon by improvement in jobless numbers, the nation’s economy may not be unable to recover more rapidly. Unemployment remains at 8.2 percent, and only a modest 73,000 jobs were added to the market last month. Some analysts worry that, if the job market does not improve, it could weigh down recovery in the housing market just as it has started gaining steam.