By Christopher S. Rugaber
WASHINGTON -- Americans signed more contracts to buy previously occupied homes in May, matching the fastest pace in two years. The increase suggests that home sales will rise this summer and the modest housing recovery will continue.
The National Association of Realtors said Wednesday that its index of sales agreements increased to 101.1 last month from 95.5 in April. That matches March's reading, the highest since April 2010, when a homebuying tax credit boosted sales.
A reading of 100 is considered healthy. The index is 13.3 percent higher than it was a year ago. It bottomed at 75.88 in June 2010, after the tax credit expired.
Contract signings typically indicate where the housing market is headed. There's a one- to two-month lag between a signed contract and a completed deal.
Recent data suggest the housing market has started to recover more than five years after the bubble burst.
Home prices rose in 19 of 20 major U.S. cities in April from March, according to the Standard & Poor's/Case-Shiller index, released Tuesday. A measure of national prices rose 1.3 percent in April, the first increase in seven months.
Sales of new and previously occupied homes are up over the past year, in part because mortgage rates have plunged to the lowest levels on record. Builders are more confident and are starting to build more homes.
New home sales jumped in May to the fastest pace in more than two years. Sales of previously occupied homes fell last month, after nearly touching a two-year high in April. Still, re-sales have risen 9.6 percent in the past 12 months.
The supply of homes for sale remains extremely low. That has helped stabilize prices and could push them higher.
The inventory of pre-existing homes for sale is back down to levels last seen in 2006. And there were 145,000 new homes for sale in May, just 1,000 higher than in April, which was the lowest supply on records dating back to 1963.
Despite the modest gains in housing, the broader economy has weakened in recent months. Employers have added an average of only 73,000 jobs a month in April and May. That's much lower than the average of 226,000 added in the first three months of this year. Some economists worry that the sluggish job market could weigh on home sales just as the housing market is flashing signs of recovery.
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By Christopher S. Rugaber