Housing Market Springs Into Shape as Contracts Surge

Sold sign in front yard of house
Getty Images

WASHINGTON -- The number of Americans who signed contracts to buy homes shot up in May. But the pace of buying this year remains slower than in 2013, in part because of sluggish sales during winter.

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index rose 6.1 percent to 103.9 last month. It was the sharpest month-over-month gain since April 2010. The index remains 5.2 percent below its level a year ago.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.

Lower mortgage rates and increased supplies of homes on the market drove much of last month's gains. Signed contracts rose in all four U.S. regions: the Northeast, Midwest, South and West.

The housing market is finally showing signs of momentum, though overall buying remains slower than last year.

"The sector continues to put the horrid [winter] weather behind it and is moving on," said Jennifer Lee, senior economist at BMO Capital Markets. "It certainly helps that confidence is higher, borrowing costs are slipped from the start of the year and it is reportedly becoming less strenuous to obtain a mortgage."

In a separate report last week, the Realtors said completed sales of existing homes rose 4.9 percent in May to a seasonally adjusted annual rate of 4.89 million homes. Still, sales are down 5 percent year-over-year.

The Realtors forecast that sales of existing homes will decline 2.8 percent this year to 4.95 million, compared with 5.1 million in 2013.

Sales of new homes jumped 18.6 percent last month to an annual rate of 504,000, the highest level since May 2008, the government said last week.

Two sources of friction in the housing market have recently eased: Mortgage rates and supplies of homes for sale.

Sales began to slow in the second half of last year as mortgage rates crept up from historic lows and prices rose further, making it less affordable for many Americans to buy. There were also too few homes for sale, which meant that would-be buyers had to delay their purchases until they had more options from which to choose.

Average rates for 30-year fixed-rate mortgages declined to 4.17 percent last week, down from 4.20 percent the previous week. Mortgage rates are about a quarter of a percentage point higher than at the same time last year.

The supply of homes for sale has also risen. The number rose 2.2 percent in May to 2.28 million. The supply is 6 percent higher than a year ago, which analysts say should help slow price growth and boost sales.

Increase your money and finance knowledge from home

How to Avoid Financial Scams

Avoid getting duped by financial scams.

View Course »

What is Inflation?

Why do prices go up?

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:
Albert Pike

Purchasing a home with a mortgage is the stupidest thing anyone could do. In 2010, I used the recession as an excuse to convince my mother in law to let us move in with her. Me and my wife have saved up $90,000 in the last 3.5 years with two kids in tow. We pay $32 per violin lesson, $30 for private art tutors, go out to eat like 4 times per week. We have bought a motorcycle, ATV, Lincoln luxury sedan, and a Dodge Durango. We haven't missed a vacation yet in addition to that $90,000. After some growing pains, my mother in law now enjoys having a full house again with her grandchildren a daily part of her life. So, not only are we benefitting financially, but we are all living better. We are here to watch the house when my mother in law can't, and she is here to watch the kids so me and the wife can have a night out. There was something lost when the greatest generation decided to give up living in multi-generational housing and separate their families.. It is just plain stupid to pay for 5 electric bills instead of 1 electric bill. Or pay for 5 water bills instead of 1, or pay property taxes for the schools when you have no children in school. Families should work together and help each other in life. At the very least go to a butcher and buy beef as a entire side of beef and have the butcher cut it up for a few aunts and uncles to divide up. Last time I bought a side of beef, it cost $2.35 a pound and it came with T-bones, ribeyes, sirloins, stew meat, hamburger, brisket, and every other cut of beef.. all for $2.35 a pound.. You can't even buy hamburger for that anymore and I was getting prime cuts of steak that normally sell for $7 or $8 a pound... that USDA sticker is an expensive tax. If you are the kind of person having a hard time paying bills, using a mortgage to pay off a house, etc.. you are an idiot. Me and my wife saved $90,000 in 3.5 years and can purchase a $100,000 house with cash in a few months if we wanted to... No interest.. No fees... No maintenance charges.. Cash !!... But, at this point, we have saved over $90,000 and why quit now and go back to slaving to cover our bills ?...We are making money hand over fist, living with the mother in law is like having a live in nanny who actually loves our children as much as we do. Life is great and it all happened because we decided to stuff the pride in a sock drawer and quit trying to live life how society deems proper and do things the smart way. I will admit that I have lost friends though. My friends who are still killing themselves to pay their bills and have very little to show for their 50 hour work weeks are jealous as hell when I ride my new motorcycle past them and wave. I am smiling like Paris Hilton on a trust fund. Life is sweet as hell and I have never had so much money in all my life. You people in the rat race hoping that will pay off some day are going about life all wrong. Live with your parents and then let your kids live with you to pay it back.

July 01 2014 at 1:04 AM Report abuse +1 rate up rate down Reply
1 reply to Albert Pike's comment

"Life is sweet as hell and I have never had so much money in all my life."

Hmmm....sounds like you are living high on the hog with a wife and two kids in tow and only 90,000 in the bank. With the outrageous cost of living that amount will not take four people far if need be.

July 01 2014 at 3:49 PM Report abuse rate up rate down Reply

Massaged data?

June 30 2014 at 10:29 PM Report abuse -1 rate up rate down Reply

One has to be able to pay cash since they can't get financing.

June 30 2014 at 9:14 PM Report abuse -2 rate up rate down Reply
1 reply to betty.brockbetty's comment
Albert Pike

this isn't 2009.... the banks are lending again as the Federal Reserve is buying mortgage backed securities as a never-ending quantitative easing program.

July 01 2014 at 1:07 AM Report abuse rate up rate down Reply

Houses in my area continue to sell before they hit the market... the last was a neighbor across the street and two doors down. 15 year old 3500 square foot brick Georgian on an acre and a half in an exclusive swim/tennis association with an award winning school system. Location, location, location.

June 30 2014 at 6:21 PM Report abuse rate up rate down Reply

Mpffff... Here in the Mid-Atlantic area (Philadelphia region), houses are selling quite well as it happens. We are in an older neighborhood (newest house in 15 square blocks is 1963, oldest is 1875, prices from $250,000 to about $700,000) and houses are averaging 62 days on the market. In fact, one of the real dogs that had been sitting for nearly 18 months just sold at 85% of original asking price. Which, as it happens, was far to high.

So, at least locally things are moving reasonably well.

June 30 2014 at 3:52 PM Report abuse +2 rate up rate down Reply

Just more hype. Home prices are still overvalued thanks to greed, greed and more greed. Affordable housing is still a joke, again due to greed. Seeing folk purchasing homes for hundreds of thousands, gutting them and spending even more thousands to bring the home up to par is total insanity. Pure greed is the main contributing factor to the upside-down nature being experienced around the globe with regards to affordable housing. As a result, there are hard-working folk that will never have the opportunity to purchase a decent "home." This supposed "upturn" in the housing market is just hype, if not there would not be more houses to choose from.

June 30 2014 at 3:21 PM Report abuse +1 rate up rate down Reply

just more lies from the obamy camp, as the economy n housing market been in the crapper since ~>JAN~ 20~09 n will not recover till ovomit is removed from our white house in handcuffs in 2014. !!! ZZZZZ AMERICA IS PAINFULLY WAITING. ZZZZZZZZZ

June 30 2014 at 12:34 PM Report abuse +2 rate up rate down Reply