Washington, DC, June 30, 2021 (GLOBE NEWSWIRE) –
- Pending home sales rose 8% in May from the previous month and 13.1% from a year ago.
- The May 2021 Pending Home Sales Index of 114.7 is the highest reading for May since 2005.
- Contract signatures increased in all regions in May compared to the previous month and a year ago.
Pending home sales rebounded sharply in May, reaching the highest number for May since 2005, according to the National Association of Realtors.®. All four of the US regions saw both month-over-month increases and year-over-year gains in pending home sales contract transactions for May.
the Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signatures, rose 8.0% to 114.7 in May. Year over year, signatures increased 13.1%. An index of 100 is equal to the level of contractual activity in 2001.
“The sharp increase in transactions in May – following the April drop, along with a sudden erosion in housing affordability – was indeed a surprise,” said Lawrence Yun, chief economist of NAR. “The housing market is attracting buyers due to falling mortgage rates, which have fallen below 3%, and a slight increase in listings.”
Although there have been a series of hurdles over the past year, including an unprecedented pandemic, record prices and historically low inventory, buyers are still lining up at a feverish pace, according to Yun.
“While these hurdles have helped drive down the prices of some potential buyers, the country’s record overall wealth from the high stock market and rising home prices is obviously providing funds for home purchases,” said Yun. “More market listings will appear in the second half of 2021, in part due to the end of the federal mortgage forbearance program and housing construction.
“Home price growth will moderate steadily as supply increases, but a widespread and prolonged decline in prices is unlikely,” Yun continued. “However, if a reduction occurs in some markets, homebuyers will view the drop in home prices as a second.–chance to enter the market after being outbid under previous multi-bid market conditions.
The hottest housing market data from Realtor.com® revealed that of the 40 largest subways, the most improved subways over the past year, as of June 29, were Tampa-St. Petersburg-Clearwater, Florida; Detroit-Warren-Dearborn, Michigan; Nashville-Davidson-Murfreesboro-Franklin, Tennessee; Riverside-San Bernardino-Ontario, California; and Jacksonville, Florida.
Regional breakdown of pending home sales for May
Northeast PHSI rose 15.5% to 98.5 in May, a 54.6% increase from a year ago. In the Midwest, the index rose 6.7% to 107.7 last month, up 7.8% from May 2020.
Pending home sales transactions in the South rose 4.9% to an index of 135.5 in May, up 6.1% from May 2020. The index in the West has rose 10.9% in May to 102.0, up 12.5% from the previous year.
The national association of real estate agents® is the largest trade association in the United States, representing over 1.4 million members involved in all aspects of the residential and commercial real estate industries.
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*The Pending Home Sales Index is a leading indicator for the housing industry, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the deal has not been completed, although the sale is usually finalized within a month or two after signing.
Pending contracts are good early indicators of the close of upcoming sales. However, the time between current contracts and closed sales is not the same for all home sales. Variations in the length of the process between the pending contract and the closed sale can be caused by issues such as buyer difficulties securing mortgage financing, home inspection issues, or valuation issues. .
The index is based on a large national sample, typically representing around 20% of existing home sales transactions. During the development of the index model, it was shown that the level of activity of monthly sales contracts corresponds to the level of sales of existing homes closed in the following two months.
An index of 100 equals the average level of contractual activity during 2001, which was the first year to be examined. Coincidentally, the sales volume of existing homes in 2001 was between 5.0 and 5.5 million, which is considered normal for the current American population.
NOTE: Existing home sales for June will be reported on July 22. The next index of pending home sales will be July 29; all exit times are 10:00 am ET.
Information on the NAR is available at www.nar.realtor. This and other press releases are posted on the NAR Newsroom at www.nar.realtor/newsroom. The statistical data for this release, as well as other tables and surveys, are displayed in the “Research and Statistics” tab.