Contracts to buy homes rose sharply nationally

The number of Americans who signed contracts to buy homes rose sharply in May. But the influx of spring buyers wasn’t enough to signal a rebound in the struggling housing market. The National Association of Realtors says its index of sales agreements for previously occupied homes rose 8.2% in May, to a reading of 88.8. The increase followed April’s seven-month low of 82.1. A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month when buyers could qualify for a federal tax credit. Signings are now 17% above June’s reading of 75.9, the lowest figure since the housing market went bust nearly four years ago. Contract signings typically are a reliable indicator of where the housing market is headed. That’s because there’s usually a one- to two-month lag between a sales contract and a completed deal. But the Realtors group says a growing number of buyers have canceled contracts ahead of closings after appraisals showed the homes were worth less than they bid. A sale isn’t final until a mortgage is closed. Homes are now the most affordable they’ve been in years. But bargain prices and super-low mortgage rates have done little to boost sales. Economists say it could be several years before the nation’s housing market recovers.