The number of Americans who signed contracts to buy homes ticked up in April to the highest level in three years. The increase points to further strength in home sales in the coming months.
The National Association of Realtors says its seasonally adjusted index for pending home sales rose 0.3 percent to 106. That's the highest since April 2010, when a homebuyer tax credit inflated sales.
Signed contracts have jumped 10.3 percent in the past 12 months. There is generally a one- to two-month lag between a signed contract and a completed sale.
Sales of previously occupied homes rose in April to a seasonally adjusted annual rate of 4.97 million, a 3 ½-year high. More buyers are bidding on a limited supply of homes for sale. That's pushing up prices.
Still, the supply of homes on the market remains low and that could keep sales from accelerating later this year. The number of available homes for sale rose in April, the Realtors' group said last week, but was still down 14 percent from a year earlier.
Fewer homes for sale may be holding back sales in tight markets out West, such as Las Vegas and Phoenix. In those cities, many homeowners still owe more on their mortgages than their homes are worth.
The trend showed up in the April pending home sales report. Signed contracts to buy homes soared 11.5 percent last month in the Northeast and 3.2 percent in the Midwest. But they fell 7.6 percent in the West and 1.1 percent in the South.
Still, the tighter supply is also pushing up home prices. That could encourage more people to put their houses on the market. The Standard & Poor's/Case Shiller 20-city home price index this week said prices rose in March nearly 11 percent over the past 12 months. That's the fastest pace in seven years.
And a limited supply of homes has made builders more willing to ramp up construction. Applications for building permits rose in April to the highest level in nearly five years.
Mortgage rates, meanwhile, jumped this week to their highest levels in a year. That means potential homebuyers are facing higher costs.
Still rates remain relatively low by historical standards. The average rate for a 30-year mortgage rose to 3.81 percent, up from 3.59 percent last week, according to mortgage buyer Freddie Mac. The record low of 3.31 percent rate was reached in November.