US pending home sales rise to highest level in 6 years

U.S. pending home sales last month surged to the highest level since December 2006, fresh evidence of the recovering housing market, a leading U.S. industry group said Thursday. The National Association of Realtors (NAR) said its index of pending home sales, which measures the number of contracts that have been signed but not yet closed for purchasing previously owned homes, rose 6.7 percent to 112.3 in May. The estimate last month was 12.1 percent higher than the level in May 2012. "Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher," said NAR chief economist Lawrence Yun. "This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand," Yun noted. The NAR index is a forward-looking indicator of future existing home sales, since there is usually one or two months' lag between signing a contract and closing a deal. A reading of 100 indicates an average level of sales activity in 2001, when the index started. The reading was above the 100 threshold from March 2003 to April 2007, and then sank as the country fell into a deep recession caused by the housing debacle.