More Americans signed contracts to buy homes in May.
That’s because “more properties are coming to market following a winter freeze, meaning supply is a little higher,” says Andrew Grantham of CIBC World Market Economics. “Meanwhile, a drift lower in mortgage rates could also be spurring stronger demand as well.”
In fact, signed contracts rose evenly across the country. Throughout last month, the seasonally adjusted pending home sales index rose 6.1% to 103.9, says the National Association of Realtors.
That was the sharpest month-over-month gain in more than four years, but the index remains 5.2% below its level a year ago. This means the pace of home buying this year is slower.
Still, says Grantham, “The recent trend in home sales should provide some comfort for the Federal Reserve, which has been expressing concern over softness in that area.”
He notes, “The better than expected [growth] figures could be slightly positive for the U.S. [dollar] and related stocks, [but] negative for fixed income.”
Pending sales are a barometer of future purchases since a one- to two-month lag usually exists between a contract and a completed sale.
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