Pending Home Sales Fell in May, Marking First YOY Decline Since August '14

Washington, DC, June 29, 2016—After steadily increasing for three straight months, pending home sales slowed in May, declining 3.7% to 110.8 and 0.2% year-over-year, marking the first year-over-year decline in almost two years, according to the National Association of Realtors. All four major regions experienced a cutback in contract activity last month.

April’s rate was downwardly revised to 115.0 in April. With last month’s decline, the index reading is still the third highest in the past year, but declined year-over-year for the first time since August 2014.

Lawrence Yun, NAR chief economist, says pending sales slumped in May across most of the country. “With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,” he said. “Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.”

Despite mortgage rates hovering around three-year lows for most of the year, Yun says scant supply and swiftly rising home prices—which surpassed their all-time high last month—are creating an availability and affordability crunch that’s preventing what should be a more robust pace of sales.