A forward-looking indicator of home sales rose to its highest level in more than nine years in May, a sign the housing market is gaining traction after a shaky start to the year.
The National Association of Realtors said Monday its index of pending home sales increased 0.9% to a seasonally-adjusted 112.6, the highest level since April 2006. The index tracks contract signings, which usually close within two months.
The April index was revised down to 111.6 from 112.4.
Economists surveyed by The Wall Street Journal had expected a 1.2% increase in May.
“The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,” NAR chief economist Lawrence Yun said.
Last week, NAR reported a sharp pickup in existing home sales following a dip in April. Sales of existing homes soared 5.1% in May to a seasonally adjusted rate of 5.35 million, the highest level since November 2009, a time when government incentives in the wake of the recession boosted the real-estate market. This year’s sales have exceeded last year’s for eight straight months and stand at 9.2% above last year.
First-time home buyers also started making their way back to the real-estate market last month.
But existing home sales, which account for about 90% of the market, are still well below their prerecession peak, when they routinely exceeded 6 million and even topped 7 million for part of 2005.
Prices have also been rising lately. The median price of an existing home last month was $228,700, or 7.9% higher than in May 2014.
“Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages,” Mr. Yun said.
Pending home sales rose 6.3% in the Northeast and 2.2% in the West but fell 0.6% in the Midwest and 0.8% in the South.