Tradex Commentary: Pending Home Sales for May

TRADEX GLOBAL INTERNAL COMMENTARY

Pending home sales rose by 5.9% in May. This number matches the highest level in two years, and is the highest monthly gain since October 2011.  The 5.9% gain by far beat consensus expectations, which was a gain of 1.3%.  Remember that pending home sales tracks signed, but not closed sales contracts.  After remaining unchanged for 4 months, this was a welcome positive piece of news that may indicate a strong buying season (Rates remain low – The 10Y is at 1.63% this morning). Enjoy the perfect day. – Richard Travia

EXTERNAL RESEARCH COMMENTARY

Contracts to purchase previously owned U.S. homes matched a two-year high in May, fueling optimism the housing market is poised for a recovery. The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, rose 5.9 percent to 101.1. The index level matched the two-year high reached in March, while the gain was the largest since October 2011. Before March, the last time pending home sales were as high was April 2010 when buyers were rushing to beat the deadline for a home-buyer tax credit, which was about to expire, the NAR said. "The housing market is clearly superior this year compared with the past four years," Lawrence Yun, NAR chief economist said in a statement. "We're on track to see a 9 to 10 percent improvement in total sales for 2012." Economists polled by Reuters had expected signed contracts, which lead home sales by a month or two, to rise 1.0 percent after a previously reported 5.5 percent drop in April.

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