WASHINGTON — More Americans than forecast signed contracts to purchase previously owned homes in May, indicating the real estate industry is firming three years after the start of the economic recovery.
The index of pending home resales climbed 5.9 percent to 101.1, matching a two-year high reached in March, after a 5.5 percent decline in April, figures from the National Association of Realtors showed Wednesday in Washington. The median forecast of 39 economists surveyed by Bloomberg News called for a 1.5 percent gain in May.
Record-low mortgage rates and cheaper properties might keep sparking buyer interest, even as cooling employment and limited access to credit remain hurdles for the market. The Federal Reserve’s decision last week to extend a program aimed at holding down borrowing costs might sustain the progress in residential real estate.
“There is a very gradual, but a recovery, happening in the housing industry – all the housing indicators seem to be pointing in that direction,” said Ken Mayland, president of Pepper Pike, Ohio-based ClearView Economics. Building permits and housing starts are “to the upside” and mortgage rates are at “unbelievable lows.”
Estimates in the Bloomberg survey ranged from a drop of 1.6 percent to a rise of 6.8 percent.
Another report Wednesday showed orders for durable goods climbed more than forecast in May, easing concern that U.S. manufacturing is faltering. Bookings rose 1.1 percent, the first gain in three months, the Commerce Department said.
Pending home sales provide insight into actual contract closings a month or two later. Purchases of existing homes, which made up about 93 percent of the housing market last year, are tabulated when the contract closes.
Wednesday’s figures suggest sales of existing homes will rebound after a drop in May. Purchases declined 1.5 percent last month to a 4.55 million annual rate, the Realtors group said June 21.
Existing-home sales have climbed since reaching a low of 3.39 million at an annual rate in July 2010. In the buildup to the subprime lending collapse and recession, sales reached a peak of 7.25 million in September 2005.
New dwellings accounted for almost 7 percent of the market last year, down from a high of 15 percent during the boom of the past decade. Sales of new homes climbed 7.6 percent to a 369,000 annual rate in May, a Commerce Department report showed June 25.
Compared with a year earlier, May pending sales of previously owned properties climbed 15.3 percent after a 14.7 percent surge in April.
Contract signings climbed in all four regions, today’s report showed, including a 14.5 percent jump in the West and a 6.3 percent gain the Midwest.
A decline in transactions involving foreclosures and short sales, where a lender agrees to accept less than the balance of the mortgage, helped push up the median price of a previously owned house up 7.9 percent from the same time last year, the biggest 12-month gain since February 2006, last week’s data showed.
Low borrowing costs continue to attract buyers. The average rate on a 30-year fixed mortgage dropped last week to 3.66 percent, the lowest since Freddie Mac record-keeping began in 1972.
Builders like Lennar Corp. are seeing improvement in the housing market. The third-largest homebuilder by revenue said today that net income for the three months through May rose to $452.7 million, or $2.06 a share, from $13.8 million, or 7 cents, a year earlier.
“Evidence from the field suggests that the ’for sale’ housing market has, in fact, bottomed and that we have commenced a slow and steady recovery process,” Chief Executive Officer Stuart Miller said in the statement.
Orders at the company climbed to 4,481 homes from 3,204 a year earlier. The Miami-based builder’s backlog jumped 61 percent.
By the numbers
• PENDING HOME SALES: The number of people who signed contracts to buy previously occupied homes rose in May, matching the fastest pace in two years. The National Association of Realtors said its index of sales agreements increased to 101.1 last month from 95.5 in April. A reading above 100 is considered healthy.
• COMPLETED HOME SALES: Completed sales of previously occupied homes fell in May to a seasonally adjusted annual rate of 4.55 million after nearly touching a two-year high the previous month. The National Association of Realtors says sales have risen 9.6 percent from a year ago. Still, sales are well below the 6 million-a-year rate that economists consider healthy.
• NEW-HOME SALES: Americans bought new homes in May at the fastest pace since April 2010, according to the Commerce Department. Sales rose 7.6 percent in May from April to a seasonally adjusted annual rate of 369,000 homes. Even with the gains, the annual sales pace is less than half the 700,000 that would be considered normal.
• HOME PRICES: Home prices rose in April from March in 19 of the 20 cities tracked by the Standard & Poor’s/Case-Shiller home price index. That’s the second straight month prices have risen in a majority of U.S. cities. And a measure of national prices rose 1.3 percent in April from March, the first increase in seven months. Based on the 20-city index, prices are now about where they were in early 2003.
• HOUSING STARTS: U.S. builders started work on more single-family homes in May for a third straight month, according to data from the Commerce Department. And homebuilders requested the most permits to start projects in 31/2 years. Overall housing starts fell in May to a seasonally adjusted annual rate of 708,000. But that was entirely because of a plunge in volatile apartment construction. Still, the rate of construction and the level of permits requested remain roughly half the pace considered healthy.The Associated Press