Pending Home Sales Move Up

Some encouraging Spring housing numbers could point to a positive summer.
The Pending Home Sales Index rose 8.2 percent to 88.8 in May, according to the National Association of Realtors. That is higher than economists had expected and the strongest monthly increase since November of last year.
It’s also the first time since April 2010 that activity was above its year-ago levels.
The index is a forward-looking indicator that measures contracts, which equates to closings in a month or two.
arrow going upMore contacts mean more home sales, which can result in higher home values.
“Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” said Lawrence Yun, NAR chief economist.
All four regions of the country marked improvements for May:
*Midwest: The Index rose 10.5 percent to 82.8 and is 17.2 percent higher than it was in May 2010.
*West: Increased 12.9 percent to 100.6 and is 13.5 percent above the same month last year.
*Northeast: Rose 7.3 percent to 69.2 and is 4.4 percent higher than a year ago.
*South: Increased 4.1 percent to 95.0 and is 14.6 percent above last year’s index.
Still, there are other circumstances at play that could slow down the housing recovery, including tight lending standards and high unemployment rates.
“Home sales still could be 15 to 20 percent higher if banks would simply return to normal sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector,” said Yun.
“[Plus] the job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country.”
Luckily, locally there have been many recent announcements of new job opportunities in Chicago. Now, let’s keep them coming and hope for more positive months ahead.