The index is based on contracts signed in May. CAR considers pending home sales an indicator of future sales activity."May marked the first year-over-year increase in pending sales since November 2009 and the largest annual increase since August 2009," said Beth L. Peerce, CAR president. "And as a result, annual sales for all of 2011 should match or exceed last year's annual pace."
Nationwide, however, the picture was not so rosy. Fewer people bought previously occupied homes in May, lowering sales to their weakest point of the year.
Home sales sank 3.8% last month to a seasonally adjusted annual rate of 4.81 million homes, the National Association of Realtors said Tuesday. That is far below the roughly 6 million annual sales rate typical in healthy housing markets.
Since the housing boom went bust in 2006, sales have fallen in four of the past five years. Analysts say they expect sales to level off at about 5 million a year. That's not much better than the 4.91 million homes sold last year, the worst showing in 13 years.
The depressed housing market has weighed on the broader economy. Declining home prices have kept people from selling their houses and moving to find jobs in growing areas. They also have made people feel less wealthy. That has reduced consumer spending, which drives about 70% of economic activity.
One sign of the housing industry's struggles is that fewer first-time buyers are entering the market. The number of first-timers ticked down to 35% of sales last month. In healthy times, they drive about half of sales.
First-time buyers are critical because they tend to improve their properties and invest in their communities, a combination that raises home values. And their purchases allow sellers to move up to pricier homes.Instead, the market has been saturated with foreclosures, which force prices down. Sales of homes at risk of foreclosure fell in May. But they still made up 31% of all purchases.
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