Pending home sales increased slightly in April, by 0.4 percent from the previous month, though they are still 9.2 percent below April 2013, according to an index by the National Association of Realtors.
The Midwest and the Northeast gained during the month, while the West and South declined, according to the index, which is based on signed contracts.
In the Northeast, pending sales rose 0.6 percent and are 12 percent below where they were a year ago. The Midwest saw a much healthier increase of 5 percent, though it is still 6.9 percent below a year ago.
The West declined 2.9 percent, to end up 15 percent below April 2013, while the South also declined, by 0.6 percent. That region is 6.4 percent below a year ago.
A fragile recovery
April marked the second straight month of gains in pending sales and Lawrence Yun, the Realtors' chief economist, expects the trend to continue, albeit gradually and unevenly, over the remainder of the year.
"Higher inventory levels are giving buyers more choices and a slight decline in mortgage interest rates this spring is raising prospective homebuyers' confidence," he says.
The latest Bankrate survey of large lenders shows the rate on a 30-year fixed mortgage dropped to 4.25 percent this week, from 4.29 percent a week ago. Yun expects the mortgage rate to slowly rise to an average of 5.5 percent next year, but its effect on the housing market will depend on additional factors.
"The extent to which higher mortgage interest rates will impact housing affordability and sales depends on income growth, ongoing improvement in the labor market and any change to mortgage underwriting conditions," he says.
Meanwhile, a week ago, the National Association of Realtors reported that existing, single-family home sales gained 1.3 percent in April -- the first monthly increase for the year. Yun cited lack of inventory as the main reason the market for buyers has been sluggish.
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