Pending home sales strongest in nine years

WASHINGTON – Americans signed contracts to buy homes in April at the fastest pace in nearly nine years, evidence that steady job growth is strengthening the real estate market.

The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index climbed 3.4 percent to 112.4 last month. It’s the fourth consecutive monthly gain. The index now stands at its highest level since May 2006.

“The confidence has returned to housing, not only as shelter but as a good long-term investment,” said Ron Peltier, CEO of Berkshire Hathaway’s real estate affiliate, HomeServices of America.

The upswing comes after a year of strong hiring, which has heightened demand to buy houses. Increased sales should help bolster the economy, but the surge could potentially destabilize the housing market, Peltier cautioned. Inventories remain low, causing home values to rise at a pace that is eclipsing wage growth.

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

Pending sales increased in the Northeast, Midwest and South, while barely edging upward in the West. Greater demand has fueled sales growth this year after a lackluster 2014. Still, there is evidence that limited inventories are beginning to weigh on the market.

Nationwide, the median price of an existing home surged 8.9 percent over the past 12 months to $219,400.

Still, there is tremendous pressure on buyers to find homes quickly, since average rates for 30-year, fixed mortgages may start to climb from the relatively low sub-4 percent level.

A new analysis by Realtor.com indicates nationwide that waiting one year to buy will subtract $18,672 from the benefits of owning over the course of 30 years.