Pending home sales increased 0.9% in May compared to April and were up 10.4% compared to May 2014, reaching the highest level since April 2006, according to the National Association of Realtors (NAR).
The increase boosted NAR's pending home sales index to a score of 112.6, up from 111.6 in April.
‘The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,’ says Lawrence Yun, chief economist for NAR, in a release. ‘It's very encouraging to now see a broad based recovery with all four major regions showing solid gains from a year ago and new home sales also coming alive.’
Although Yun says this could be best year for pending home sales since the start of the Great Recession, he warns that tight supply and rising home prices could put a damper on the pace of recovery.
‘Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages,’ he says. ‘Without meaningful gains in new and existing supply, there's no question the goalpost will move further away for many renters wanting to become homeowners.’
Breaking down May pending home sales by region, the Northeast saw sales increase 6.3%, month over month, compared to April, while the West saw sales rise 2.2%. The Midwest region saw pending home sales fall 0.6% while sales in the South decreased 0.8%. All regions were up compared to a year earlier.