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Pending Home Sales Turn in Weak Performance

Mortgage News

Contracts on existing homes moved higher for the second month in a row. But the increase was weak, and activity sank compared to a year earlier.

In April, the Pending Home Sales Index came in at 97.8. The index is an indication of contract signings.

A small improvement was made from a month earlier, when the index was 97.4. It was the second consecutive monthly improvement.

The National Association of Realtors, which reported the metric on Thursday, explained that an index of 100 represents the average level of contract activity during 2001, when tracking began.

The trade group noted that a 5.0 percent gain in the Midwest and an 0.6 percent increase in the Northeast offset a 2.9 percent decline in the West and an 0.6 percent drop in the South.

But the national index tumbled 9.2 percent from the same month in 2013, when it was 107.7. All regions suffered a year-over-year decline.

While the deterioration from a year earlier could reflect a delay for many in the home-shopping process during the first quarter due to harsh weather conditions, sales in the West — a region least impacted from the winter — dropped more than in any other: 15.0 percent.

Slightly lower mortgage rates and rising inventories are expected to gradually drive home sales higher this year, according to NAR Chief Economist Lawrence Yun.

However, this year’s existing home sales are expected to fall short of the 5.1 million for 2013 thanks to a weak first quarter. But 2015 sales are expected to near 5.3 million.

The NAR predicts U.S. home prices will rise between 5 and 6 percent in 2014, and next year’s increases are expected to be between 4 and 5 percent.

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