27 June 2013 18:38 [Source: ICIS news]
WASHINGTON (ICIS)--US pending home sales rose by 6.7% in May from April, the National Association of Realtors (NAR) said on Thursday, reaching the highest level for this key indicator since before the housing sector collapse in 2007.
In its monthly report, NAR said that its pending home sales index (PHSI) rose to 112.3 in May from the downwardly revised April measure of 105.2.
Last month’s pace of pending home sales, said NAR, is 12.1% ahead of activity seen in May last year when the index was at 100.2.
Pending home sales in May marked the highest level since December 2006, NAR noted, when the measure was at 112.8. The US housing bubble began to deflate in 2007.
In addition, said the association, monthly pending home sales have been above year-ago levels for the past 25 months.
A residential property sale is listed as pending when a contract has been signed but the transaction has not been closed and funded with a mortgage loan. A pending sale usually closes within a month or two of contract signing.
The association's pending sales index is seen as a reliable, forward-looking indicator for near-term expectations in the ?xml:namespace>
The index is measured against a 100 baseline set by the NAR in 2001 to represent an average or healthy pace of pending home sale contracts.
NAR chief economist Lawrence Yun said that continuing growth in pending sales may be attributable to recent slight increases in mortgage loan interest rates and the faster pace of real estate price gains.
“It appears that some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” he said.
“This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand,” he added.
Yun also said that he now expects US existing home sales will increase by as much as 9% this year from 2012, reaching a total of about 5.07m.
That would be the highest rate of existing home sales in seven years, he said, and slightly above the 5.03m recorded in 2007.
The US housing sector is a major downstream consuming industry for a wide variety of chemicals, resins and derivative products. While the lion’s share of that chemicals consumption is in construction of new homes, recent gains in existing home sales are an indicator that new home construction should be improving as well.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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