By Vicki Needham - 06/30/14 11:43 AM EDT
Pending home sales rose sharply in May on lower mortgage rates and more homes going on the market, a new report showed Monday.
Those signing contracts to buy homes increased 6.1 percent to 103.9 in May from 97.9 in April, but that still remains 5.2 percent below May 2013 (109.6), the National Association of Realtors said.
“Sales should exceed an annual pace of 5 million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation,” said Lawrence Yun, NAR chief economist.
"However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total," he said.
Despite the positive gains in May, Yun cautions that affordability and access to credit is still an area of concern for first-time home buyers.
"The flourishing stock market the last few years has propelled sales in the higher price brackets, while sales for homes under $250,000 are 10 percent behind last year’s pace," Yun said.
All four regions had increases in May — sales in the Northeast jumped 8.8 percent, signed contracts in the Midwest were up 6.3 percent, sales in the South rose 4.4 percent, while contracts in the West were up 7.6 percent.
Yun expects existing-homes sales to be down 2.8 percent this year to 4.95 million, compared with 5.1 million in 2013.
The national median existing-home price is projected to grow between 5 percent and 6 percent this year and in the range of 4 percent to 5 percent in 2015.