Pending home sales surged more than expected in May, the latest sign a sluggish housing recovery is picking up steam.
Signed contracts for previously owned homes jumped 6.1% from April, the National Assn. of Realtors said Monday. It was the largest pop since April 2010. Then, families rushed to lock in a first-time home buyer tax credit before it expired.
After slowing last summer, the housing market appears to be turning a corner. More homes on the market, slowing price appreciation and lower mortgage rates have lured buyers off the sidelines, economists say.
May's pending sales data beat expectations.The median forecast for economists polled by Bloomberg News was for a 1.5% rise.
And buyers closed deals on 4.9% more previously owned homes in May than April. Meanwhile, new home sales jumped 18.6% in May.
"An improvement in sales is likely to continue for a least a few more months, a welcomed reprieve after a significantly slow start to the year," Sterne Agee chief economist Lindsey Piegza said in a statement.
Still, the market isn't humming like last year. Higher prices and fewer foreclosures have investors and families less likely to strike a deal. Pending sales last month were 5.2% below May 2013 levels.
The Realtors pending sales index, adjusted for seasonal swings, tracks signed, but not closed contracts for previously owned homes. Deals usually close within one or two months.
Pending sales rose in all regions from April. In the West, they climbed 7.6%.
Further gains, Piegza said, will rely on "sustained improvement in income and job creation."