In April, the National Association of Realtors' Pending Home Sales Index rose for the third straight month and saw its biggest increase since October 2001, rising 6.7 percent. The report is another sign that the U.S. housing market is stabilizing, say some experts.
The Pending Sales Index is an indicator of future sales, with the latest report measuring home contracts signed in April. This month's Pending Sales Index comes on the heels of a recent NAR report that showed that sales of existing single-family homes also rose in April, rising 2.9 percent from April 2008.
Boosting home sales are low mortgage rates and the first-time buyer tax credit, says NAR.
"Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market," says Lawrence Yun, NAR chief economist. "Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers."
However, a major impediment to the housing market is the fact that prices continue to fall. In April, the national median home price -- $170,200 -- was 15.4 percent below April 2008's median price, says NAR. Also, a high inventory of foreclosures and distressed properties continue to weigh down the market, with distressed sales making up 45 percent of all sales in April, according to NAR.
Another hurdle for the housing market is a shaky job market -- half a million private sector jobs were lost in May, Reuters reports. Until the job market improves, it's unlikely we'll see a major recovery in the housing market anytime soon.—Lauren Baier Kim