RTTNews - Pending home sales increased for the fifth consecutive month in June, according to a report released by the National Association of Realtors on Tuesday, with the increase in pending sales exceeding economist estimates by a wide margin.
The report showed that the pending home sales index jumped 3.6 percent to 94.6 in June from an upwardly revised reading of 91.3 in May. Economists had been expecting a much more modest increase of about 0.7 percent.
NAR noted that pending home sales haven't shown five consecutive monthly increases since July of 2003.
A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Lawrence Yun, NAR chief economist, said, Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who've been on the sidelines.
Activity has been consistently much stronger for lower priced homes, Yun added.
The bigger than expected increase in pending home sales was largely due to strength in the South, where pending home sales jumped 7.1 percent.
Pending home sales in the West also rose 2.9 percent, while pending sales in the Northeast and Midwest rose 0.4 percent and 0.8 percent, respectively.
The report also showed that NAR's Housing Affordability Index slipped to 159.2 in June from 169.8 in May, although it remains well above 122.6 in the same month a year ago.
Under these conditions, NAR said the typical family would devote 15.7 percent of gross income to mortgage principal and interest, well below the standard allowance of 25 percent.
A monthly rise in home prices and somewhat higher mortgage interest rates led to a modest decline in affordability in June, but it was still the sixth highest index on record dating back to 1970, Yun said.
He added, Because housing is so affordable in today's market, job security and the first-time buyer tax credit are bigger factors in influencing home sales.
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