If it’s spring, it must be home-buying time.
Reuters reported that the level of contracts to buy U.S. homes defined as previously owned were at a 10-month high in February, which indicates, as the newswire notes, “robust demand” leading into what is traditionally a busy time for selling houses.
The National Association of Realtors reported Wednesday (March 29) that what might be traditional deterrents to housing sales — in the form of higher prices and higher mortgage payments — are not stanching buying activity, even against the larger backdrop of a slowing economy (at least as measured by first-quarter growth). In terms of the statistics, the Pending Home Sales Index as presented by the realtors’ association found 5.5 percent growth, to a 112.3 reading. That marks a high point since last April and it is also, said Reuters, the second-best level in more than 10 years — and it also reverses a drop seen in January of 2.8 percent.
One driver may have been, and may still be, the weather, warmer than usual. Even so, markets have been steady and on Thursday (March 30) had opened flattish. Investor eyes seem to be on the Federal Reserve and interest rate policy, where some officials — notably Charles Evans, who helms the Chicago Fed as president — has said that more monetary policy may be in the offing this year. That commentary might be seen to contrast with Evans’ previous championing of low interest rates.
The question remains as to how a boost in interest rates, off historically low bases, might impact housing and, in general, the economy at large. If wages continue to rise, then would-be buyers would conceivably feel more flush with cash and might be prone to pull the trigger on a new purchase of a home. At the same time, housing inventories are tight, which means that home prices are also on the rise, up in the mid-single-digit percentages as measured in January of this year against the same period last year. Breaking down the regional activity, reports showed that pending sales of homes were up 11.4 percent in the West and 3.4 percent in the Northeast, followed by 3.1 gains in the West.