National Association of Realtors® (NAR) said today that rising
interest rates may finally be forcing many hesitant buyers into the
market. NAR's Pending Home Sales Index (PHSI) which is based on home
purchase contracts, reached the highest in May that it has achieved
since late 2006. NAR also announced it was upgrading its price
forecast for 2013.
PHSI increased 6.7 percent to 112.3 in May from April's level of
105.2 (revised down from an original estimate of 106.0.) The May
number was 12.1 percent above the PHSI in May 2012 when it was 100.2
The index has been higher than in the corresponding month a year
earlier for each of the last 25 months and the May number was the
highest for the Index since December 2006 when it was 112.8.
Index is a forward looking indicator based which has proven to be
predictive of home sales. Transactions under contract are generally
expected to close within 60 days. An index of 100 is equal to the
average level of contract activity during 2001, which was the first
year to be examined.
chief economist Lawrence Yun said the recent rising interest rates
may be creating a fence-jumping effect. "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," he said.
"This implies a continuation of double-digit price increases from a
year earlier, with a strong push from pent-up demand."
said he expected the national median existing-home price to rise more
than 10 percent to nearly $195,000 by year end. This would be
the strongest increase since 2005 when the median increased 12.4
sales are projected to increase 8.5 to 9.0 percent, reaching about
5.07 million in 2013, the highest in seven years; it would be
slightly above the 5.03 million total recorded in 2007.
PHSI in the Northeast was unchanged at 92.3 in May but is 14.3
percent above a year ago. In the Midwest the index jumped 10.2
percent to 115.5 in May and is 22.2 percent higher than May 2012.
Pending home sales in the South rose 2.8 percent to an index of 121.8
in May and are 12.3 percent above a year ago. The index in the
West jumped 16.0 percent in May to 109.7, but with limited inventory
is only 1.1 percent above May 2012.