The National Association of Realtors® released monthly Pending Home Sales Index results for May, reporting improved levels of pending sales growth not seen since December 2006. Pending contracts showed 25 consecutive months of growth with latest figures up 6.7 percent over prior month, and 12.1 percent above results for the prior year. Buyers are encouraged to take advantage of record low interest rates. Lawrence Yun, NAR’s chief economist reports that there are fewer housing choices available in many markets. The May Pending Home Sales Index was released after Freddie Mac reported that the Federal Reserve might reduce its stimulus program; this action prompted one of the largest weekly increases in mortgage rates ever seen.
The rising rates don’t seem to be dampening 
buyers’ enthusiasm, as evidenced by the uptick in homes under contract in the Pending Homes Sales Index. In fact, Yun is upgrading NAR predictions calling for a 10 percent increase in the median sales price of existing homes. That would mean a median home price of $195,000. The market hasn’t seen escalations in median prices like this since the beginning of the boom back in 2005. With most markets experiencing high buyer affordability, Yun said we are experiencing some “fence jumping”—i.e.: proverbial fence sitters are finally making a buying move after taking stock of the rising rates and prices. This is good news for the sellers; as increased values mean fewer under-water mortgages.
The latest Pending Home Sales Index shows an increase in sales in the South region of 2.8 percent for the month, a rise of 12.3 percent versus prior year. Pending contracts in the Midwest rose 10.2 percent from April and are 22.2 percent higher than in May 2012. The West and Northeast didn’t fare as well in this month’s Pending Home Sales Index; however, industry leaders at NAR believe this can be attributed to the lower available housing inventory levels. The West region experienced a month-to-month gain of 16.0 percent, but the increase only translated to a 1.1 percent increase over the preceding year. The Northeast pending sales volume is up 14.3 percent year-over-year, however pending sales remained flat as compared to prior month results.
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Sources:
1) http://www.realtor.org/news-releases/2013/06/may-pending-home-sales-reach-highest-level-in-over-six-years
2) http://www.inman.com/wire/mortgage-rates-post-largest-weekly-increase-in-25-years/
3) http://www.inman.com/wire/pending-home-sales-hit-highest-level-in-over-6-years/