The number of U.S. homebuyers who agreed to purchase a previously occupied home in April posted the largest monthly jump in nearly eight years, a sign that sales are finally coming to life after a long and painful slump.
The National Association of Realtors (NAR) said Tuesday its seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts’ forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.
Economists surveyed by Thomson Reuters expected the index would edge up to 85 from a reading of 84.6 in March.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing home sales.
I would think this big rally is due to the fact that President Barack Obama introduced the $8,000 tax credit for first-time homebuyers. This was included in his economic stimulus bill signed back in February.
Since buyers need to finish their purchases by Nov. 30 to claim the credit one should expect more activity in the months ahead.
The national median sales price in April plunged more than 15 percent to $170,200, from $201,300 in the same month last year. That was the second largest yearly price drop on record, according to NAR.