Ahead of the Bell: US existing-home sales likely rose in May
WASHINGTON (AP) — The National Association of Realtors reports on May sales of existing homes Monday at 10 a.m. Eastern.
STRONGER SALES: Economists expect that sales rose 4.8 percent to a seasonally adjusted annual rate of 5.28 million homes, according to a survey by the data firm FactSet.
It would mark a strong rebound after the sales pace slipped in April, but it would also represent the third consecutive month that the annual sales rate exceeds 5 million homes.
Solid hiring since 2014 and relatively low mortgage rates have stirred up buyer demand, though rising sales have fueled spiking prices because relatively few properties are listed on the market.
Only a 5.3 months’ supply of homes was on the market in April, versus an average of six months in a healthy market
Economists say that the sales gains of recent months could be short-lived if prices increase so sharply buyers are priced out of the market. The recent rise in mortgage rates could also curtail sales, similar to the higher mortgage rates slashing into sales in the middle of 2013.
SHOPPING FOR HOMES: Still, real estate has begun to show some strength after muddling through much of the six-year recovery from the recession.
More Americans signed contracts to buy existing homes in April — which should translate into more finalized sales in the following months. The Realtors’ seasonally adjusted pending home sales index climbed 3.4 percent to 112.4 in April, the highest reading since May 2006.
Sales of newly constructed homes through the first four months of the year are up 23.7 percent compared to the same period in 2014, according to the Commerce Department.
Builders are gearing up to meet the additional demand.
Approved building permits in May surged 11.8 percent to an annual rate of 1.28 million, the strongest reading since August 2007, according to the Commerce Department. Construction firms are breaking ground on more houses and apartment complexes, with the government reporting a 6 percent increased year-to-date.
Much of that growth stems from the spillover effect from a stronger jobs market. Employers have added 3.1 million jobs over the past 12 months, increasing the total number of paychecks in the economy and the likelihood that more Americans will shop for homes.
Low mortgage rates have also helped, although rates are now starting to steadily rise in ways that might limit sales later in the year.
Average 30-year fixed rates were 4 percent last week, according to the mortgage giant Freddie Mac. That average has increased from a 52-week low of 3.59 percent.