Pending Home Sales Up 1.1% in May

Pending Home Sales Up 1.1% in May

Pending home sales increased in May, a positive variation from the minor sales dip seen in the previous month, according to the National Association of Realtors®. Three of the four major regions saw growth in contract activity, with the West experiencing a slight sales decline.

The Pending Home Sales Index,* www.nar.realtor/pending-home-sales, a forward-looking indicator based on contract signings, climbed 1.1% to 105.4 in May, up from 104.3 in April. Year-over-year contract signings declined 0.7%, marking the 17th straight month of annual decreases.

Lawrence Yun, NAR chief economist, said lower-than-usual mortgage rates have led to the increase in pending sales for May. “Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates.”

Yun said consumer confidence about home buying has risen, and he expects more activity in the coming months. “The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points,” he said. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.”

Citing the hottest housing markets from data at realtor.com®, Yun says the year-over-year increases could be a sign of a rise in inventory. Rochester, N.Y., Fort Wayne, Ind., Lafayette-West Lafayette, Ind., Boston-Cambridge-Newton, Mass., and Midland, Texas, were the hottest housing markets in May.

Yun said that while contract signings and mortgage applications have increased, there is still a great need for more inventory. “Home builders have not ramped up construction to the extent that is needed,” he said. “Homes are selling swiftly, and more construction will help keep home prices manageable and thereby allow more middle-class families to attain ownership opportunities.”

May Pending Home Sales Regional Breakdown

The PHSI in the Northeast rose 3.5% to 92.0 in May and is now 0.5% below a year ago. In the Midwest, the index grew 3.6% to 100.3 in May, 1.2% lower than May 2018.

Pending home sales in the South inched up 0.1% to an index of 124.1 in May, which is 0.7% higher than last May. The index in the West dropped 1.8% in May to 91.8 and decreased 3.1% below a year ago.

The National Association of Realtors® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

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After earning her bachelor’s degree in journalism at the University of Central Florida, Tracey set out in the real world at Florida Realtors in 1994 as a communication assistant, working her way up to editor in chief of Florida Realtor magazine. In 2004, she left the association to start her freelance writing and editing business. One of her first clients was REAL Trends, and she started working for the organization in 2005. In 2014, Tracey was promoted to editor in chief of publications for REAL Trends. She handles the writing and editing of all REAL Trends publications and marketing materials, including LORE Magazine, the REAL Trends newsletter and the blog. She is also the primary podcast interviewer where she conducts interviews with top real estate industry leaders and affiliated industry leaders. Tracey is married with two children.

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