“Job additions and rising household wealth will continue to support housing demand,” NAR chief economist Lawrence Yun said in a statement accompanying the release. Because of limited availability of properties, “little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses.”
Last week, the group said existing-home sales dropped in March as a lean supply of properties kept the industry from generating a stronger recovery. Purchases of previously owned homes fell 0.6% to a 4.92 million annualized rate. The median price increased 11.8% from a year earlier.
Fewer available homes compared with last year has limited how fast the existing market can pick up and put upward pressure on prices and demand for newly-built dwellings. Sales of new U.S. homes advanced in March, completing the strongest quarter since 2008.
Historically low lending rates and a healing labor market are helping keep demand growing. The average rate for a 30-year fixed mortgage was 3.40% in the week ended April 25, down from 3.41%, according to Freddie Mac. In November, the rate reached an all-time low of 3.31%. The average 15- year rate dropped to a record-low 2.61%.
“Companywide, our sales and traffic have been strong,” Robert Schottenstein, president and chief executive officer of Columbus, Ohio-based builder M/I Homes Inc., said during an April 25 earnings conference.
“The quality of traffic is also improving, with buyers having both a greater sense of optimism as well as a greater sense of urgency, no doubt fueled by the historically low interest rates, limited inventory both new and used and the fact that we’re also seeing rising prices in many markets and submarkets,” he said.
Economists consider pending home sales a leading indicator because they track contract signings. Existing homes sales are tabulated when a contract closes, usually a month or two later.