Featured News

Categories: HousingNews

Pending home sales rose in May, but economists say it's just a blip

Pending home sales increased in May, breaking a streak of six successive monthly declines, but the National Association of Realtors said it is likely a blip and that sales will continue to fall as the year progresses.

The NAR’s latest data shows that contract signings, which are a forward indicator of home sales based on signed contracts to buy a home, rose by 0.7% last month. Contract signings are considered to be the most useful gauge of future home sales, though of course some deals may fall through.

Although the increase is encouraging, NAR Chief Economist Lawrence Yun said the data doesn’t hide the fact that the housing market is going through a transition. After all, contract signings are still down more than 13% from the same month last year.

“Contract signings are down sizably from a year ago because of much higher mortgage rates,” he pointed out.

Economists have previously cited the rapidly rising mortgage rates as the main culprit that has made buyers more cautious. Assuming a 10% down payment, the monthly payment on a media-priced single family home has increased by around $800 since the start of the year. That’s solely because of mortgage rates, which have risen by just over 2.5 percentage points since January.

Yun was critical of the mortgage rate increases: “Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy,” he said. “The better way to balance the market is through increased supply, which also helps the broader economy.”

The reality though is that housing shortages are the story nationwide, with a lack of listings causing big problems in the housing market and adding to affordability problems.

As such, fluctuations in home prices and housing affordability led to significant regional differences in contract signings in May, Yun said. For example, the Western region posted the largest decrease in contract activity. That is also the region of the U.S. where homes tend to be the most expensive.

“This further indicates the growing need to increase supply to tame home price growth and improve the chances of ownership for potential home buyers,” Yun said.

Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

Recent Posts

The Beginner's Guide to Homeowner's Insurance

Congratulations! You've finally found a home you like and put in an offer. If accepted,…

10 hours ago

Do Pocket Listings Benefit Sellers in Any Way?

When buying or selling a house, you may hear real estate terms you're unfamiliar with.…

13 hours ago

Turn Your Dream Home into Reality - How to Find the Perfect Home For You

Dreams are a powerful force that helps people see the unseen. When not acted upon,…

2 days ago

5 Tips To Consider When Buying Property Abroad

Buying property abroad can be an exciting yet intimidating experience. With all the different aspects…

3 days ago

How Rental Bonds Work and What They Mean for Tenants

When you sign a lease agreement to rent a property, the landlord will ask for…

3 days ago


ERA Real Estate, a global franchising leader within the AnywhereSM portfolio of brands, announced today…

3 days ago