WASHINGTON – Pending sales of previously owned U.S. homes rose at their fastest pace in more than three years in June, a real estate trade group said on Wednesday, in a hopeful sign for the downtrodden housing market.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in June, rose 5 percent to 102.4 from a downwardly revised index of 97.5 in May.
It was the first increase in this index since February and was a surprise to economists who forecast that pending home sales would decline by 0.6 percent, according to a Reuters poll.
"Relatively warm weather in May and June may have helped a bit, but this is very hard to square with the extreme gloominess of homebuilders and the clear credit crunch in the mortgage market as subprime and Alt-A lenders disappear," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.
The real estate association's senior economist Lawrence Yun called the latest monthly reading encouraging, citing increases in all four major regions of the country. "However, it is too early to say if home sales have already passed bottom," he said.
"Still, major declines in home sales are likely to have occurred already and further declines, if any, are likely to be modest given the accumulating pent-up demand," Yun added.
This index offers a good look into home sales moving forward because these pending sales contracts are usually finalized within one or two months.
Even with the unexpected gain in June -- the biggest monthly rise since a 6.1 percent increase in March 2004 -- sales were down 8.6 percent from a year ago.