April Pending Home Sales Rose by 5.1%

Washington, DC, May 26, 2016—The Pending Home Sales Index hiked up 5.1% to 116.3 in April from an upwardly revised 110.7 in March and is now 4.6% above April 2015 (111.2), according to the National Association of Realtors.

After last month's gain, the index has now increased year-over-year for 20 consecutive months.

All major regions saw gains in contract activity last month except for the Midwest, which saw a meager decline.

Lawrence Yun, NAR chief economist, says vast gains in the South and West propelled pending sales in April to their highest level since February 2006 (117.4). "The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets," he said. "The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market."

On the topic of mortgage rates, which have remained below 4% in 16 of the past 17 months, Yun says it remains to be seen how long they will stay this low. Along with rent growth, rising gas prices—and the fading effects of last year's cheap oil on consumer prices—could edge up inflation and push rates higher. For now, he foresees mortgage rates continuing to hover around 4 percent in coming months, but inflation could potentially surprise the market and cause rates to increase suddenly.