Home Sales Spike Higher in April

Washington, DC, June 10, 2008--An index of sales contracts on previously owned U.S. homes rose 6.3 percent in April from the prior month, the National Association of Realtors reported.

However, the index, considered a leading indicator of existing home sales, was down 13.1 percent from a year ago. The index had declined in both March and February.

"Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it's unclear if they are investors or owner-occupants," said Lawrence Yun, National Association of Realtors chief economist.

By region, the April pending home sales index fell only in the Northeast, with a 1.9 percent decline. The index rose 13.0 percent in the Midwest, 8.3 percent in the West and 4.6 percent in the South.

Pending sales contracts have increased "notably" in areas with significant price drops, Yun said.

"Sharp price reductions are leading to a quicker discovery of price equilibrium points," Yun said.

NAR sees new-home sales falling 31.7 percent to 529,000 in 2008.

"Policymakers need to be attentive to the fact that many homeowners have seen a reduction in housing equity, or are in an 'underwater' situation," Yun said. "More needs to be done on the policy front to alleviate hardships and bring fence-sitters back into the marketplace."

Also Monday, NAR said it expects the median new-home price to decline 3.1 percent to $239,500 in 2008, and then rise 5.4 percent next year to $252,400.

"Rising construction costs will provide less room for price cuts on new homes," Yun said.