Existing Home Sales on the Rise

homes sales
image provided by greathomesofcharleston.com

Bloomberg Businesweek Article

The number of contracts to purchase previously owned U.S. homes jumped in May by the most in more than four years, a sign the residential-real estate market is rebounding after a slow start to the year.

The pending home sales index climbed 6.1 percent… The gain exceeded the most optimistic projection in a Bloomberg survey of economists, whose median forecast called for a 1.5 percent gain.

Economists consider pending sales a leading indicator because they track new purchase contracts.

The S&P/Case-Shiller index of property values increased 10.8 percent from April 2013, the smallest 12-month gain in more than a year, after rising 12.4 percent in March, the group reported last week.

First, I’m glad to be able to a write on my blog again after a long hiatus due to teaching summer classes.

My opinion: One can’t help but be optimistic with these results. A rise in housing sales is a broad indicator of future economic prosperity.

My favorite part about the article is the statement about property values increasing, but at a slower pace. This to me signals a deepening housing market. Where the overall price of housing has increased to the point that people who didn’t want to sell their homes for a loss are now more willing to put their homes on the market. As the price increases, more houses enter the market and subsequently slow the pace of price growth.

Now if wages grow in the next month or so, I think the recovery will start to gain some substantial momentum.


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