U.S. pending home sales bounce back 1.1 percent in May

WASHINGTON — Pending home sales across the nation 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, a forward-looking indicator based on contract signings, climbed 1.1 percent to 105.4 in May, up from 104.3 in April. Year-over-year contract signings declined 0.7 percent, marking the 17th straight month of annual decreases.

Lawrence Yun, chief economist for the NAR, said lower-than-usual mortgage rates have led to the increase in pending sales for May.

“Rates of 4 percent and, in some cases even lower, create extremely attractive conditions for consumers,” he said. “Buyers, for good reason, are anxious to purchase and lock in at these rates.”

Yun said consumer confidence about homebuying has risen and that 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 said the year-overyear increases could be a sign of a rise in inventory.

Rochester, New York; Fort Wayne, Indiana; Lafayette-West Lafayette, Indiana; Boston-Cambridge-Newton, Massachusetts; 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.”

REGIONAL BREAKDOWN

The Pending Home Sales Index in the Northeast rose 3.5 percent to 92.0 in May and is now 0.5 percent below a year ago.

In the Midwest, the index grew 3.6 percent to 100.3 in May, 1.2 percent lower than May 2018.

Pending home sales in the South inched up 0.1 percent to an index of 124.1 in May, which is 0.7 percent higher than last May.

The index in the West dropped 1.8 percent in May to 91.8 and decreased 3.1 percent below a year ago.