Pending home sales surged more than expected in May, the latest sign a sluggish housing recovery is picking up steam.
A gauge of signed contracts for previously owned homes jumped 6.1 percent from April, the National Association of Realtors said Monday. It was the largest pop since April 2010. Then, buyers rushed to lock in a first-time homebuyer tax credit before it expired.
After slowing last summer, the housing market appears to be turning a corner. More homes on the market, slowing price-appreciation and lower mortgage rates have lured buyers off the sidelines, economists say.
The Realtors’ pending sales index, adjusted for seasonal swings, tracks signed, but not closed, contracts for previously owned homes. Deals usually close within one or two months.
May’s pending-sales data beat expectations. The median forecast for economists polled by Bloomberg News was for a 1.5 percent rise.
And buyers closed deals on 4.9 percent more previously owned homes in May than April. Meanwhile, new-home sales jumped 18.6 percent in May.
“An improvement in sales is likely to continue for at least a few more months, a welcomed reprieve after a significantly slow start to the year,” Sterne Agee chief economist Lindsey Piegza said in a statement.
Still, the market isn’t humming like last year. Higher prices and fewer foreclosures have investors and families less likely to strike a deal. Pending sales in May were 5.2 percent below May 2013 levels.
Pending sales rose in all regions from April.
Further gains, Piegza said, will rely on “sustained improvement in income and job creation.”