[ForexNews]

Pending home sales, which track signed contracts of existing homes, jumped 6.7%m/m in April, the third consecutive monthly gain. This was considerably above market consensus expectations for a 0.5% gain. The improvement in affordability from low rates and deep discounting, coupled with the first-time homebuyer tax credit, has boosted housing demand.

The upward surprise was due to a 33% surge in sales in the Northeast, which pushed the index level to its highest since November 2007. Some suspect that part of the increase is simply noise in the data and may be revised lower or reversed over the next few months. Sales gained 9.8% in the Midwest, which pushed up the y/y rate to 11%. Sales inched up 1.8% in the West but slipped 0.2% in the South. Surprisingly, growth in home sales has started to slow in the West, which has the highest share of foreclosure sales.