The rise in home sales indicates that housing inventories should continue to drop, meaning more business for contractors and construction equipment sales could soon follow. NAR said it was the first time in six years that its pending home sales index had gone up five straight months.
Lawrence Yun, NAR chief economist, said a combination of positive market factors is fueling the gains, including record affordability and low mortgage rates. Yun expects existing-home sales to gradually rise over the balance of the year, with conditions varying around the country.
"It appears home sales are on a sounder footing and inventory is gradually being absorbed," Yun said.
NAR President Charles McMillan said the affordability index is down from record peaks in recent months but it remains 36.6 percentage points above a year ago.
Under these conditions the typical family would devote 15.7 percent of gross income to mortgage principal and interest, well below the standard allowance of 25 percent.
