What's the big picture in home sales so far this year? We are on a path of monthly incremental increases in sales, but overall are seeing a slower market than last year. Some of the data underlying this statement was released this past week, showing pending home sales improved for the second straight month in April. Pending sales are key to watch because they track transactions under contract, which is a forward-looking indicator for sales volume the following month.
The National Association of Realtors' Pending Home Sales Index increased 0.4% to 97.8 in April from 97.4 in March, but is 9.2% below the same month a year ago when it was 107.7.
What appears to be boosting monthly sales is more homes on the market and a slight decline in mortgage interest rates during the spring – both of which bode well for encouraging and enabling buyers to close deals.
Pending sales tracked in April were led by gains in the Midwest and Northeast, which offset declines in the West and South.
In the Northeast, the Pending Sale Index increased 0.6% to 79.3 in April, but was 12% below a year ago, NAR reported. Meanwhile, the index climbed 5% to 99.2 in the Midwest that same month, but stood at 6.9% below April 2013. Pending sales in the South declined 0.6% to an index of 111.9, and were 6.4% below a year ago. And the index in the West also declined 2.9% to 88.4, 15% below year-ago levels.
While certainly the monthly upward movement bodes well, annual existing home sales are anticipated to end the year slightly below the 5.1 million we saw at the end of 2013. NAR economists expect sales to return to 2013 levels in 2015. Meanwhile, home prices are expected to grow 5-6% this year and 4-5% in 2015.
Housing is healthy overall, with local markets looking starkly different in some cases. The goal for this year is to get more inventory on the market and keep affordability in check so we can continue to usher first-time buyers into homes.