Pending home sales increase 44.3 percent in May
After two months of declines due to the coronavirus pandemic, May’s pending home sales made a record comeback—reporting the highest month-over month gain in the index since NAR started tracking the data in January 2001. May’s contract signings increased 44.3 percent to an index of 99.6, though year-to-year contract signings were down 5.1 percent.
“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” says NAR’s chief economist, Lawrence Yun. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
“More listings are continuously appearing as the economy reopens, helping with inventory choices,” says Yun. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”
The hot spots
Among the largest metro areas, data from realtor.com® showed active listings were up by more than 10 percent in the following areas:
- Urban Honolulu, Hawaii
- San Francisco, Calif.
- San Jose, Calif.
- Denver, Colo.
- Colorado Springs, Colo.
“The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10 percent—even after missing the spring buying season due to the pandemic lockdown,” explains Yun.
NAR predicts existing-home sales will reach 4.93 million units in 2020, with new home sales hitting 690,000. “All figures light up in 2021 with positive GDP, employment, housing starts and home sales,” says Yun, noting that in 2021 sales are expected to rise to 4.35 million units for existing homes and 800,000 for new homes.
Growth across the regions
All four major regions saw month-over-month growth in pending home sales transactions, though the South was the only region to also see an increase in year-over-year signings.
May pending home sales index:
- Northeast: up 44.4% to 61.5—down 33.2% from last year
- Midwest: up 37.2% to 98.8—down 1.4% from last year
- South: up 43.3% to 125.5—up 1.9% from last year
- West: up 56.2% to 89.2—down 2.5% from last year