Pending Home Sales Surge; Fifth Straight Monthly Rise

By: CNBC.com with wires

Pending home sales rose for the fifth consecutive month in June, easily topping expectations, according to the National Association of Realtors.

The Pending Home Sales Index rose 3.6 percent to 94.6 from an upwardly revised reading of 91.3 in May, and is 6.7 percent higher than in June 2008. Reuters had expected an 0.6 percent increase.

The last time there were five consecutive monthly gains was July 2003.

The housing market's collapse is at the heart of the longest U.S. recession since the Great Depression and reviving the sector is critical to healing the economy. The data served as further evidence that the housing market was starting to claw out of a three-year slump.

"Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who've been on the sidelines. Activity has been consistently much stronger for lower priced homes," said Lawrence Yun, NAR chief economist.

Pending home sales were higher in all four regions than last month, and only the west experienced a decrease from a year ago. The index in the Northeast rose 0.4 percent to 81.2 in June and was 5.8 percent above the same period last year. In the Midwest, the index climbed 0.8 percent to 89.9. It was 11.6 percent higher than June 2008.

The index in the South jumped 7.1 percent to 100.7 in June and was 8.9 percent higher versus a year ago. In the West, the index rose 2.9 percent to 100.4, but was 0.2 percent below June 2008.

"Hopefully, in the months ahead, we'll see an even closer relationship between contract activity and closed transactions," said NAR president Charles McMillan.

The organization's Housing Affordability Index fell from record peaks reached in recent months but remains 36.6 percentage points above one year ago.