Pending-home sales grow 1.1 percent in May
After a minor sales dip in April, May brings a refreshing increase in pending-home sales, climbing 1.1 percent. However, year-over-year contract signings declined 0.7 percent, marking the 17th straight month of annual decreases.
Lawrence Yun, NAR chief economist, credits lower mortgage rates for May’s increase in pending sales. “Rates of 4 percent 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.”
With rising consumer confidence, Yun anticipates steady activity with a potential increase in inventory. “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.”
The hottest housing markets in May include: Rochester, N.Y., Fort Wayne, Ind., Lafayette-West Lafayette, Ind., Boston-Cambridge-Newton, Mass. and Midland, Texas.
Yun feels that despite an increase in contract signing and mortgage applications, inventory needs to continue to increase in order for homeownership to be attainable. “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.”
From a regional standpoint, three of the four major regions experienced growth in pending-home sales this May. The Northeast increased 3.5 percent, the Midwest increased 3.6 percent, the South saw a slight increase of 0.1 percent, while the West decreased 1.8 percent.