The number of homes that went under contract in April climbed to the highest level in over 10 years, a sign the housing market is gaining traction and supported by steady job creation and historically low interest rates.
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Pending sales of previously owned homes, reflecting contract signings, rose 5.1% last month from March, the National Association of Realtors said Thursday. The sales index climbed to 116.3, the highest level since February 2006. An index of 100 is equal to the average level of contract activity during 2001, which the NAR considers a "normal," or balanced, market for the current U.S. population.
Houses remain in short supply relative to steady demand, which has driven up prices, especially in regions with strong job creation. And builders aren't adding new homes swiftly enough: the inventory of new homes for sale sank at the end of April to its lowest level in more than a year, the Commerce Department said Tuesday.
NAR's chief economist Lawrence Yun said the spring buying season was even more robust than expected, given the "affordability stresses and inventory squeezes" that have hit local housing markets around the country.
Economists surveyed by The Wall Street Journal expected pending home sales to rise 0.7% in April.
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