Pending home sales slide in May
A lack of housing inventory impacted the latest Pending Home Sales Index (PHSI).
Pending homes sales fell 2.7% to a level of 76.5 in May compared to 78.5 in the prior month, the National Association of Realtors reported this morning.
The PHSI is a forward-looking indicator of home sales based on contract signings. An index of 100 is equal to contract activity in 2001.
On a Year-over-year basis, pending transactions dropped 22.2%.
“Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing,” said NAR Chief Economist Lawrence Yun, “The lack of housing inventory continues to prevent housing demand from being fully realized.”
In contrast, the latest New Residential Sales report saw sales of new single-family home increase 12.2% to a seasonally adjusted annual rate of 763,000. The latest new home sales figure is also 20% above May 2022 estimate of 636,000.
“It is encouraging that homebuilders have ramped up production, but the supply from new construction takes time and remains insufficient,” added Yun. “There should be more focus on boosting existing-home inventory with temporary tax incentive measures.”
“It is encouraging that homebuilders have ramped up production, but the supply from new construction takes time and remains insufficient,” added Yun. “There should be more focus on boosting existing-home inventory with temporary tax incentive measures.”
In its latest existing-home sales report, the NAR reported that housing inventory registered at the end of May was 1.08 million units, up 3.8% from April but down 6.1% from one year ago (1.15 million).
Existing-home sales in May edged ahead by just 0.2% from April to a seasonally adjusted rate of 4.3 million. Year-over-year, sales plummeted by 20.4% and a rate o 5.4 million in May 2022.
Here’s the breakdown of pending home sales on a regional basis for May 2023:
- The Northeast PHSI climbed 12.9% from last month to 66.7, a decrease of 21.9% from May 2022.
- The Midwest index dropped 5.3% to 74.4 in May, down 23.5% from one year ago.
- The South PHSI decreased 4.4% to 94.4 in May, reducing 19.6% from the prior year.
- The West index lessened 6.1% in May to 58.4, falling 26.6% from May 2022.
