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Pending Home Sales at Highest Level in 18 Months
U.S. home buyers signed more contracts to buy existing homes in January than they have since August of 2013, according to the National Association of Realtors. Its monthly index of pending sales, an indicator of future closed sales, rose 1.7 percent month-to-month, and is now 8.4 percent higher than it was a year ago. This is the fifth straight month of year-over-year gains, and the gains are increasing. "Contract activity is convincingly up compared to a year ago despite comparable inventory levels," said the association's chief economist Lawrence Yun in a release. "The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth."
The lack of supply is pushing price gains again. They had been shrinking throughout much of last year, but recent reports show the gains accelerating again. Realtors expect sales to gain strength over the next few months, with one big caveat. "The pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double digits isn't healthy or sustainable in the current economic environment," admitted Yun. Pending home sales in the Northeast inched up 0.1 percent in January, and are now 6.9 percent above a year ago. In the Midwest, sales fell 0.7 percent, but are 4.2 percent above January 2014. Sales were strongest in the South, up 3.2 percent to the highest level since April 2010 and 9.7 percent above last January. Sales in the West rose 2.2 percent and are 11.4 percent above a year ago.
Credit to Lonny Coffey, Affiliated Bank Mortgage