Contracts to buy U.S. homes up sharply in May

WASHINGTON — The number of Americans who signed contracts to buy homes shot up in May. But the pace of buying this year remains slower than in 2013, in part because of sluggish sales during winter.

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index rose 6.1 percent to 103.9 last month. It was the sharpest month-over-month gain since April 2010. The index remains 5.2 percent below its level a year ago.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.

Lower mortgage rates and increased supplies of homes on the market drove much of last month’s gains. Signed contracts rose in all four U.S. regions: the Northeast, Midwest, South and West.

The housing market is finally showing signs of momentum, though overall buying remains slower than last year.

“The sector continues to put the horrid (winter) weather behind it and is moving on,” said Jennifer Lee, senior economist at BMO Capital Markets. “It certainly helps that confidence is higher, borrowing costs are slipped from the start of the year and it is reportedly becoming less strenuous to obtain a mortgage.”

In a separate report last week, the Realtors said completed sales of existing homes rose 4.9 percent in May to a seasonally adjusted annual rate of 4.89 million homes. Still, sales are down 5 percent year-over-year.

The Realtors forecast that sales of existing homes will decline 2.8 percent this year to 4.95 million, compared with 5.1 million in 2013.

Sales of new homes jumped 18.6 percent last month to an annual rate of 504,000, the highest level since May 2008, the government said last week.

Two sources of friction in the housing market have recently eased: Mortgage rates and supplies of homes for sale.

Sales began to slow in the second half of last year as mortgage rates crept up from historic lows and prices rose further, making it less affordable for many Americans to buy. There were also too few homes for sale, which meant that would-be buyers had to delay their purchases until they had more options from which to choose.

Average rates for 30-year fixed-rate mortgages declined to 4.17 percent last week, down from 4.20 percent the previous week. Mortgage rates are about a quarter of a percentage point higher than at the same time last year.

The supply of homes for sale has also risen. The number rose 2.2 percent in May to 2.28 million. The supply is 6 percent higher than a year ago, which analysts say should help slow price growth and boost sales.

More in Herald Business Journal

Glitches slow Boeing, SpaceX plans for human spaceflight

Boeing has an issue with its abort system that may cause the spacecraft to “tumble.”

Best foot forward: Ferndale company to make custom shoes easy

Long specializing in insoles, Superfeet is putting 3-D machines in stores to make customized shoes.

Planemaker joins forces with auto-industry supplier Adient

The new venture poses a threat to Zodiac Aerospace and Rockwell Collins

Alaska Airlines has selected destinations for new service from Paine Field. (Alaska Airlines)
Alaska Airlines will fly from Everett to 8 West Coast cities

Two destinations that didn’t make the list were Spokane and Hawaii.

Port of Everett CEO Les Reardanz has been called up and will be spending much of the year away from his office. He is going to Afghanistan. (Dan Bates / The Herald)
Port of Everett CEO reporting for duty — in Afghanistan

Les Reardanz has been called to active duty with the Navy for an eight-month deployment.

Boeing opens new $17 million training center in Auburn

Workers and dignitaries marked the grand opening of the facility Monday.

Trump’s company fights efforts to shed the president’s name

“Our homes are worth more without the Trump name.”

Airbus floats shutdown of A380 superjumbo

The aircraft is so big that some airports had to expand runways to accommodate the 550-seat plane.

Does a hypersonic US reconnaissance plane already exist?

A Skunk Works executive speaks of the top secret aircraft as if it is already in operation.

Most Read