Pending Home Sales Surge 6.7% In April

Source : The Business Times, June 3, 2009

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(WASHINGTON) The number of US homebuyers who agreed to purchase a previously occupied home in April posted the largest monthly jump in nearly eight years, a sign that sales are finally coming to life after a long and painful slump.

The National Association of Realtors said yesterday its seasonally adjusted index of sales contracts signed in April surged 6.7 per cent to 90.3, far exceeding analysts' forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 per cent.

'This is yet another positive indication that the bottoming process is forming,' Jennifer Lee, an economist at BMO Capital Markets, told clients. 'Now if only prices would stabilise.'

Economists surveyed by Thomson Reuters expected the index would edge up to 85 from a reading of 84.6 in March. Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing home sales.

'The pronounced increase in April does indicate that actual existing home sales are poised to rise in the coming month or two,' wrote Joshua Shapiro, chief US economist with MFR Inc.

The index was 3.2 per cent above last year's levels and has risen for three straight months after hitting a record low in January.

A nearly 33 per cent sales increase in the Northeast and a 9.8 per cent jump in the Midwest led the overall surge. Sales contracts rose 1.8 per cent in April from a month earlier in the West, but fell 0.2 per cent in the South.

The big boost likely reflects the impact of a new US$8,000 tax credit for first-time homebuyers that was included in the economic stimulus bill signed by President Barack Obama in February. - AP
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