Pending sales of existing homes rose to their highest level in nearly two years in March, according to the National Association of Realtors’ latest Pending Home Sales Index.
The index, which represents contracts signed but not yet closed, jumped a seasonally adjusted 4.1 percent from February to March, to 101.4. That’s the highest index level since April 2010, when the deadline for a federal homebuyer tax credit program loomed. The index was 111.3 then.
Pending sales were up 10.8 percent from the same time a year ago on a non-seasonally adjusted basis.
An index score of 100 is equal to the average level of sales-contract activity in 2001, a year in which home sales fell in a range that’s considered "normal" for the current U.S. population. The index typically represents about 20 percent of all existing-home transactions. Contracts signed in March typically close one or two months later.
"First-quarter sales closings were the highest first-quarter sales in five years. The latest contract signing activity suggests the second quarter will be equally good," said Lawrence Yun, NAR’s chief economist, in a statement.
"The housing market has clearly turned the corner," Yun said. "Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses."
Regionally, the Northeast saw the biggest unadjusted year-over-year increase in pending sales: 18.4 percent. The region was one of two to see a slight monthly decline, sliding 0.8 percent on a seasonally adjusted basis to 78.2.
The other region experiencing a month-over-month decline was the Midwest, where the index dipped a seasonally adjusted 0.9 percent to 93.3. Nonetheless, the Midwest experienced the second-biggest annual increase in pending sales: 14.7 percent on an unadjusted basis.
The index reached its highest level in the South: 114.1. That’s a 5.9 percent seasonally adjusted increase compared to February. On an unadjusted basis, pending sales were up 8.9 percent from a year ago.
In the West, pending sales rose 8.7 percent month to month, to 108, and 5.9 percent from the same time a year ago on an unadjusted basis.
In its latest monthly economic outlook, also out today, NAR upped its forecast for existing-home sales in 2012 slightly from last month, to 4.68 million — a nearly 10 percent increase from 2011. The trade group expects existing-home sales to rise an additional 1.5 percent in 2013, to 4.75 million.
NAR projects new-home sales will rise 31.6 percent in 2012, to 400,000, and increase a further 32.5 percent in 2013 to 530,000.
After falling 3.9 percent in 2011, NAR expects a 2 percent increase in the median price of existing-home sales in 2012, to $169,500. The association predicts a further 2.1 percent increase, to $173,100, in 2013.
Meanwhile, after rising 2 percent in 2011, NAR projects rents will rise 3.4 percent in 2012 and 3.8 percent in 2013.
This year, NAR predicts the average interest rate for a 30-year fixed rate mortgage will be 4.2 percent, down from 4.7 percent in 2011. By 2013, the rate is expected to rise to 4.9 percent.
NAR expects this year’s national real gross domestic product to grow 2.4 percent, followed by 3.1 percent growth in 2013. The U.S. unemployment rate is expected to average 8.2 percent this year and drop to 7.6 percent in 2013.