Filed Under: Business

Pending home sales see surprise increase in May amid wider market cooldown

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Signs were starting to point to a slowing housing market, but in a surprise swing, pending home sales increased in May, snapping a six-month skid. According to the National Association of Realtors, the pending homes sales index ticked up 0.7% in May from April when economists had expected a 4% contraction.

“The definitive unsustainable blip,” Pantheon Macroeconomics Chief Economist Ian Shepherdson said.

The pending home sales index is a strong indicator for future home sales. In May, new home sales also increased by 10.7%, while existing home sales contracted 3.4%.

“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” NAR Chief Economist Lawrence Yun said. “Contract signings are down sizably from a year ago because of much higher mortgage rates.

Pending home sales are still down 13.6% on the year. Buyers might have felt more comfortable making deals in May when mortgage rates fell slightly, but the 30-year fixed rate inched back up in June, surpassing 6% by the middle of the month.

According to NAR, the monthly mortgage payment on a median single family home has gone up $800 since the start of the year.

The sales increase was largely regional, too. The Northeast saw a big boom in May, up 15.4% for the month, while the South barely increased at 0.2%. Sales declined in the West and Midwest, at 5% and 1.7%, respectively.

SIMONE DEL ROSARIO: SIGNS WERE STARTING TO POINT TO A SLOWING HOUSING MARKET… BUT IN A SURPRISING SWING, PENDING HOME SALES INCREASED IN MAY – SNAPPING A SIX-MONTH SKID.

ACCORDING TO THE NATIONAL ASSOCIATION OF REALTORS – THE PENDING HOME SALES INDEX TICKED UP 0.7% IN MAY FROM APRIL. ECONOMISTS HAD EXPECTED A 4% DIP.

“THE DEFINITIVE UNSUSTAINABLE BLIP,” ACCORDING TO ‘PANTHEON MACRO’ CHIEF ECONOMIST IAN SHEPHERDSON.

PROBABLY BECAUSE HOMES UNDER CONTRACT ARE STILL DOWN 13.6% ON THE YEAR.

THE SALES INCREASE WAS LARGELY REGIONAL TOO. THE NORTHEAST SAW A BIG BOOM IN MAY – UP 15.4% FOR THE MONTH, WHILE THE SOUTH BARELY INCREASED, AND SALES CONTINUED TO DECLINE IN THE WEST AND MIDWEST.

BUYERS MIGHT HAVE FELT MORE COMFORTABLE MAKING DEALS IN MAY WHEN MORTGAGE RATES FELL, BUT THE 30-YEAR FIXED INCHED BACK UP IN JUNE.

ACCORDING TO NAR – THE MONTHLY MORTGAGE PAYMENT ON A MEDIAN SINGLE FAMILY HOME HAS GONE UP $800 SINCE THE START OF THE YEAR.

IN NEW YORK FOR JUST BUSINESS I’M SIMONE DEL ROSARIO.

Signs were starting to point to a slowing housing market, but in a surprise swing, pending home sales increased in May, snapping a six-month skid. According to the National Association of Realtors, the pending homes sales index ticked up 0.7% in May from April when economists had expected a 4% contraction.

“The definitive unsustainable blip,” Pantheon Macroeconomics Chief Economist Ian Shepherdson said.

The pending home sales index is a strong indicator for future home sales. In May, new home sales also increased by 10.7%, while existing home sales contracted 3.4%.

“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” NAR Chief Economist Lawrence Yun said. “Contract signings are down sizably from a year ago because of much higher mortgage rates.

Pending home sales are still down 13.6% on the year. Buyers might have felt more comfortable making deals in May when mortgage rates fell slightly, but the 30-year fixed rate inched back up in June, surpassing 6% by the middle of the month.

According to NAR, the monthly mortgage payment on a median single family home has gone up $800 since the start of the year.

The sales increase was largely regional, too. The Northeast saw a big boom in May, up 15.4% for the month, while the South barely increased at 0.2%. Sales declined in the West and Midwest, at 5% and 1.7%, respectively.

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