"The housing market is likely to continue recovering lost ground following its weather-induced stumble earlier this year"
- Gennadiy Goldberg, an economist at TD Securities
The number of contracts to buy previously owned U.S. homes rose to the highest level in eight months in May, adding to evidence that real estate market is rebounding after a recent soft patch. The National Association of Realtors reported Monday the pending home sales index surged as much as 6.1%, the most in more than four years, when home sales jumped 9.6% ahead of the expiration of a tax credit for first-time buyers. The May reading followed a revised 0.5% rise in April. The gauge exceeded the most upbeat projections of economists, who looked for a 1.5% climb. Contracts rose in all regions across the country, with the Northeast and West enjoying the largest advance. Nevertheless, the data appeared to have a little impact on the U.S. financial markets.
Housing demand is boosted on the back of cheaper borrowing costs, brighter employment outlook and easier access to credit for households. However, higher prices and subdued income gains keep the improvement in the housing market from becoming more broad-based. Thus, the residential real estate market is finally showing signs of gaining steam, though overall buying remains slower compared to last year. A separate report last week showed that sales of completed sales of existing homes surged 4.9% in May to a seasonally adjusted annual rate of 4.89 million homes.
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