Last month, the number of pending home sales, which are contracts to buy previously owned homes in the United States, increased for the first time in nine months. This is seen as being a positive sign that the housing market might be stabilizing, leaving behind the effects of a severe winter and increases in interest rates.
According to the National Association of Realtors, the pending home sales index which is based on contracts signed in March rose to 97.4, an increase of 3.4%. This is far in excess of economists’ expectations who had expected a 1% rise. Once contracts have been signed, they usually translate into sales within a month or two, and the increase last month suggests sales of previously owned homes could begin to bounce back in the months ahead.
Last summer, sales began to drop off after suggestions that the U.S. Federal Reserve would soon reduce its economic stimulus plan, leading to higher interest rates. This was followed by a harsh winter that helped to deter buyers. The article in aol.com points out that these latest figures could show the housing market is gaining momentum during the spring buying season which is typically busier. It's hoped increasing momentum in the housing market would help support economic growth in the United States during the coming months.
During the winter, the U.S. economy slowed, as much the country was hit by harsh weather. However growth is expected to increase during the rest of the year. It's expected that the U.S. Labor Department will shortly release a report showing 210,000 jobs were created this month. The yield on 30 year US government bonds increased following the recent release of housing data, as did the price for stocks.
Before these recent figures, sales of existing homes had fallen to the lowest levels seen for more than eighteen months, but this latest report seems to show the downward trend in resales has reached the end of its course. Now inventory levels are rising, and greater numbers of first time buyers are looking to purchase homes in the near future. Even though figures for last month were encouraging, pending home sales were still 7.9% lower than for the same period last year. The number of contracts signed increased in the West, the Northeast and the South, but figures declined in the Midwest.
There is also the question as to when the Federal Reserve will decide to begin raising short term interest rates from zero. This rate has been in position since 2008, and has helped to keep borrowing rates low.