The Pending Home Sales Index — a forward-looking indicator based on contracts signed — rose 0.1 percent in May from April, and it was 6.7 percent higher than May 2008, NAR announced this morning. It is the fourth consecutive month that the pending home sales index posted a monthly gain, which NAR attributes to the wide availability of affordable housing and the positive impact of the first-time homebuyer tax credit.
Regionally, the index showed a monthly gain of 3.1 percent in the Northeast and 2.2 percent in the West, but declined 1.3 percent in the Midwest and 1.7 percent in the South. Totals in all four regions topped year-ago numbers. The index increased 6.8 percent in the Northeast, 11.4 percent in the Midwest, 7.9 percent in the South and 0.7 percent in the West.
The Housing Affordability Index (HAI) fell slightly in May from April, when it reached the highest level on record dating back to 1970, but it remains near historic highs, NAR reports. The HAI is a broad measure used to illustrate the relationship between home prices, mortgage interest rates and family income. A family earning the median income of $60,800 could afford a home priced at $296,700 in May with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest, the study finds.