Pending Home Sales Rose 1.1% in May
Washington, DC, June 27, 2019-The Pending Home Sales Index climbed 1.1% to 105.4 in May, up from 104.3 in April, according to the National Association of Realtors.
Year-over-year contract signings declined 0.7%, marking the 17th straight month of annual decreases.
Lawrence Yun, NAR chief economist, said lower-than-usual mortgage rates have led to the increase in pending sales for May. “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.”
Yun said 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,” 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 says the year-over-year 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.”