By Inman News

Pending home sales rose 6.7 percent in April, as a strong surge in homes under contract in the Northeast and Midwest outweighed flat demand in the South and West, the National Association of Realtors reported today.

NAR’s Pending Home Sales Index, based on contracts signed in April, rose 6.7 percent to 90.3, up from 84.6 in March and an improvement of 3.2 percent from a year ago.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

In the Northeast, the index jumped 32.6 percent in April, to 78.9, up 0.8 percent from a year ago. In the Midwest the index rose 9.8 percent, to 90.4, up 11.1 percent from a year ago. The index in the South slipped 0.2 percent to 93, but was 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8, but was 2.9 percent below April 2008.

Prices in many markets have fallen more in line with incomes, and mortgage rates for borrowers with good credit remain near historic lows. NAR’s housing affordability index, which looks at the relationship between home prices, mortgage interest rates and income, is near a record high.

The affordability index rose to 174.8 in April, the second-highest reading on record after a peak of 176.9 in January.

With a 20 percent down payment, a family earning $60,900 could have purchased a $296,800 home in April and covered their mortgage principal and interest payments with 25 percent of their gross income.

But NAR Chief Economist Lawrence Yun warned that the reporting sample for pending home sales is smaller than that for existing homes, and that closings are taking longer than in the past.

Mortgage processing time has increased, and it can take many months to close on short sales requiring lender approval, Yun said. Some short sales are falling through at the last minute.

Nevertheless, Yun said, existing-home sales are expected to improve — but with dramatic variations in timing at the local market level.

“The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.