Low inventory of homes for sale has made it a seller's market in many areas of the country – and as home prices continue to rise, more homeowners have been putting their properties on the market.
As such, pending home sales increased 3.4% in April compared to March and were up 14% compared to April 2014, according to the National Association of Realtors (NAR). It was the fourth straight month that pending home sales increased, reaching their highest level in nine years, the firm says.
Lawrence Yun, chief economist for NAR, says the steady gains in contract activity each month this year highlight the fact that buyer demand is strong.
‘Realtors are saying foot traffic remains elevated this spring despite limited – and in some cases severe – inventory shortages in many metro areas,’ Yun says in a release. ‘Homeowners looking to sell this spring appear to be in the driver's seat, as there are more buyers competing for a limited number of homes available for sale. As a result, home prices are up and accelerating in many markets.’
Yun says despite the significant drop in existing home sales in April, he is optimistic that the single-family housing market will rebound heading into the summer. At the same time, Yun concedes that in order to see meaningful gains, inventory will need to increase and prices will need to moderate.
‘The housing market can handle interest rates well above four percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers – especially first-time buyers – are able to obtain a mortgage,’ he says.
Looking at pending home sales regionally for April, the Northeast bounced back solidly with a 10.1% increase, while the Midwest saw pending sales increase 5.0%. Meanwhile pending home sales in the South rose 2.3% while the West saw pending home sales rise only 0.1%.
NAR is currently forecasting that total existing-home sales in 2015 will be around 5.24 million, an increase of 6.1% from 2014. The firm further forecasts that home prices will rise by about 6.7% this year, after rising about 5.7% in 2014.