Pending home sales increased "sharply" in May, according to the National Association of Realtors.
The Pending Home Sales Index went up 6.1 percent to 103.9 in May from 97.9 in April, a boost the NAR attributes to lower mortgage rates and an increased inventory. While still 5.2 percent below a year ago, May's 6.1 percent increase was the largest month-over-month gain since April 2010.
"Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation," NAR Chief Economist Lawrence Yun said in a statement. "However, second-half sales growth won't be enough to compensate for the sluggish first quarter and will likely fall below last year's total."
Yun cautioned that first-time home buyers are still troubled with home price affordability and access to credit. First-time buyers accounted for only 27 percent of existing-home sales in May and, though sales of homes in the higher price brackets are increasing, sales for homes under $250,000 are 10 percent behind last year's pace.
"Solid income growth and a slight easing in underwriting standards are needed to encourage first-time buyer participation, especially as renting becomes less affordable," Yun said.
