By Kate Davidson
WASHINGTON--A forward-looking gauge of U.S. home purchases rose
for the fourth straight month in April and reached its highest
level in nine years--the latest evidence of firming demand in the
housing market.
The National Association of Realtors said Thursday its pending
home sales index, which is based on contract signings for purchases
of previously owned homes, increased 3.4% to a seasonally adjusted
level of 112.4 in April from an upwardly revised reading of 108.7
in March.
Economists surveyed by The Wall Street Journal had expected
pending home sales would rise 1% in April. Home sales typically
close within a couple months after signing.
The index rose 14% in April from a year earlier. That was the
eighth consecutive year-over-year increase, NAR said. The index is
at its highest level since May 2006.
"Realtors are saying foot traffic remains elevated this spring
despite limited--and in some cases severe--inventory shortages in
many metro areas," said Lawrence Yun, NAR's chief economist.
News Corp., the owner of The Wall Street Journal, also owns Move
Inc., which operates a website and mobile products for the National
Association of Realtors.
The gains were broad-based, with all four major regions of the
country seeing increases in pending sales.
Sales have stabilized since dipping a year ago, when interest
rates on mortgages began to rise from near-record lows. Other
recent housing data suggest the spring home-selling season is off
to a strong start.
Sales of newly built homes climbed 6.8% in April, to a
seasonally adjusted annual rate of 517,000, the Commerce Department
said Tuesday.
Completed existing-home sales fell 3.3% in April after surging
in March, the Realtors said last week. But the March numbers were
revised even higher, and NAR said much of the decline was due to a
lack of supply rather than decreased demand from buyers.
Meanwhile, U.S. home-building rose 20.2% in April to the highest
level since before the recession officially began, the Commerce
Department said last week.
"We are very wary of calling a serious, sustained upturn [in]
the housing market, but most of the omens right now are good,"
Pantheon Macroeconomics Chief Economist Ian Shepherdson said in a
note to clients.
Limited inventories have pushed up prices for existing homes.
That has helped close the gap in cost between typically more
expensive new homes and previously-owned properties. Still,
existing home sales account for about 90% of the overall
market.
The average interest rate for a 30-year fixed-rate mortgage was
3.67% in April, according to Freddie Mac. Rates are down one-tenth
of a percentage point from the previous month and remain low by
historical standards.
According to Wednesday's report, pending sales of existing homes
in April rose 10.1% in the Northeast, following four straight
monthly declines. Pending sales rose 5% in the Midwest, 2.3% in the
South and 0.1% in the West.
Write to Kate Davidson at kate.davidson@wsj.com