Pending sales of us homes hit highest level since 2006

Based on contract signings, sales increased 6.7 per cent in May compared to April 2013, leaving transactions 12.1 percent above May 2012. Now, contract activity is at the strongest pace since December 2006 when it reached 112.8 on the NAR index; pending sales have been above year-ago levels for the past 25 months.

Lawrence Yun, NAR chief economist, said there may be a fence-jumping effect.  “Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” he said.  “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”

Yun upgraded the price forecast for 2013, with the national median existing-home price expected to rise more than 10 percent to nearly $195,000.  This would be the strongest increase since 2005 when the median increased 12.4 percent.

Existing-home sales are projected to increase 8.5 to 9.0 percent, reaching about 5.07 million in 2013, the highest in seven years; it would be slightly above the 5.03 million total recorded in 2007.