Pending home sales edge up in May
Year-over-year contract signings decline 0.7% in May.
Pending home sales increased 1.1% in May following a 1.5% slip in April, the National Association of Realtors (NAR) reported.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, climbed to 105.4 in May from 104.3 in April. Year-over-year contract signings declined 0.7%, marking the 17th straight month of annual decreases, however.
Mortgage rates, which are lower than usual, are being given credit for May’s rise.
“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,” said Lawrence Yun, chief economist of the NAR.
Yun also said that 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,” Yun said. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.”
By region, the PHSI increased in the Northeast by 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.
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.”
Earlier this week, President Donald Trump signed an executive order creating the White House Council on Eliminating Regulatory Barriers to Affordable Housing. The move looks to cut costly regulations and escalate the production of affordable homes.
The 2019 State of the Nation’s Housing report from the Harvard Joint Center for Housing Studies, released earlier this week, documents how the housing shortfall is keeping pressure on house prices and rents while eroding affordability for modest-income households.
No comments found