Pending Existing Home Sales Rise by Most Since 2010

Contracts to purchase previously owned U.S. homes climbed in April by the most since October 2010, adding to signs that the industry's busy selling season was off to a good start, according to data released Thursday by the National Association of Realtors.

The index of pending home resales increased 5.1%, compared with a forecast was 0.7%, after a revised 1.6% gain in March. It increased 2.9% from April 2015 on an unadjusted basis (the forecast was for 0.2%). Three of four regions reported an increase, including a 11.4% surge in the West that was the biggest according to records back to 2001.

Pending sales in the South climbed 6.8%, the most since April 2010, and 1.2% in the Northeast.

The sales gauge rose to a decade-high of 116.3 on a seasonally adjusted basis; a value of 100 indicates "historically healthy" buying activity, according to NAR.

The boost in contract signings is a good sign that robust home-buying activity will continue during the spring-selling season, following reports that existing-home purchases jumped to a three-month high in April and new-home sales surged to the strongest in eight years. While would-be buyers are deterred by limited inventories especially among lower-priced homes, a steady jobs market and cheap borrowing costs are helping to fuel demand.

"The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets," NAR chief economist Lawrence Yun said in a statement. "The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers to the market."

Yun projects sales of existing homes to increase 3% in 2016 to 5.41 million.