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What Pending Sales Numbers Mean For Buyers

The National Association of Realtors’ Pending Home Sales Index is a good indication of where home sales will be a month or two down the road. That’s because, it measures the number of signed contracts that occurred during the month, rather than the number of closings. And since there is typically about a month between having an offer accepted and closing the deal, the number of pending sales can be a pretty accurate predictor of future home sales numbers. According to the most recent release, pending sales were down 1.3 percent in April from the month before. Lawrence Yun, NAR’s chief economist, says there may be fewer contracts signed as the spring goes on because of a lack of available listings. “Much of the country, for the second straight month, saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” Yun said. In other words, the number of homes for sale can’t keep up with the number of buyers interested in buying them. That means, home buyers should expect to find competition for the homes that are available for sale this summer. More here.

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Average Rates Remain Near This Year’s Low

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were largely unchanged last week. Loans backed by the Federal Housing Administration and 15-year fixed-rate mortgages both saw slight declines, while 30-year fixed-rate mortgages with both conforming and jumbo balances were unmoved. This follows the previous week’s results which showed mortgage rates at their lowest point so far this year. However, despite favorable rates, demand for mortgage applications was down from the previous week. Michael Fratantoni, MBA’s chief economist, told CNBC the reason may be inventory. “Home sales remain constrained by a lack of inventory across the country, as evidenced by home price growth running almost three times the pace of overall inflation,” Fratantoni said. Still, though fewer homes for sale may be holding sales back, mortgage application demand remains 7 percent higher than at the same time last year, which indicates strong interest from buyers this spring. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.