Pending Home Sales Fell 2.7% In May. Will They Continue To Fall? NAR Bullish About Housing. Is There Another Housing Apocalypse Coming?
Pending home sales were steady in April like they had been since the beginning of the year. However, pending home sales fell in May. they dropped 2.7%, according to data released Thursday by the National Association of Realtors.
Year over year, pending home sales were down 22.2%. This is a larger decrease than the 20.3% annual drop recorded in April.
The NAR’s Pending Home Sales Index fell to a reading of 76.5 in May. An index of 100 is equal to the level of contract activity in 2001.
NAR Chief Economist Lawrence Yun told HousingWire:
Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing. The lack of housing inventory continues to prevent housing demand from being fully realized.”
Yun says he is also optimistic about the impact increased housing starts and homebuilder confidence will have on the market:
It is encouraging that homebuilders have ramped up production, but the supply from new construction takes time and remains insufficient. There should be more focus on boosting existing-home inventory with temporary tax incentive measures.”
All regions of the country declines in pending home sales in May. The Western states recorded the largest drop at 6.1%. The Northeast was the only region to post a monthly increase in May with a 12.9% increase.
Post-pandemic, there was an expectation that we would see a return to housing market seasonality. However, it appears it is going to take at least another year before market conditions reflect those more normal patterns. Experts say the spring market will extend into summer as buyers face limited choices and are waiting for mortgage rates to come down.