Contracts to buy homes rose sharply in May

June 29, 2011 - 9:14 AM

WASHINGTON (AP) — The number of people who signed contracts to buy homes rose sharply in May, pushed higher by an influx of spring buying.

The National Association of Realtors says its index of sales agreements for previously occupied homes rose 8.2 percent last month, to a reading of 88.8. That 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.

Contract signings are typically a reliable indicator of where the housing market is headed. But the Realtors group says a growing number of buyers have cancelled contracts ahead of closings after appraisals showed the homes were worth less than they bid.