A leading indicator of the housing industry which led the US economy into recession, has just signaled an upturn.
Pending home sales in March rose for the second month in a row and topped its level from March 2008, the National Association of Realtors (NAR) reported Monday. That's the first time the index has stood above its year-ago level since December 2008. Because pending sales track housing transactions where contracts are signed but not yet closed, they offer a one- to two-month advance view of home sales.
Despite the upbeat reading – a 3.2 percent advance from February and a 1.1 percent year-over-year jump – analysts remained cautious.
“We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around,” said Lawrence Yun, chief economist for the NAR, in a statement.
One reason for the upturn: Housing affordability remains near record levels, the NAR also reported Monday. Because of falling mortgage rates and a slight increase in income, Americans can afford a more expensive home. A year ago in March, a median-income family with a 20 percent down payment could afford a $268,500 single-family home. This March, it could afford a $291,600 home.
Falling home prices have made the deal even better. Since March 2008, the cost of the median single-family home has fallen 11.5 percent to $174,900.