Pending home sales recovered in May, reaching the highest reading ever for the month since 2005, according to the National Association of Realtors. The Pending Home Sales Index (PHSI) rose 8% to 114.7, and contract signings increased 13.1% year over year.
“May’s strong increase in transactions—following April’s decline, as well as a sudden erosion in home affordability—was indeed a surprise,” says Lawrence Yun, NAR’s chief economist. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings.”
Although there has been a series of obstacles over the last year, including the pandemic, record-high prices, and all-time low inventory, buyers are still lining up at a feverish pace, according to Yun.
“While these hurdles have contributed to pricing out some would-be buyers, the record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases,” continues Yun. “More market listings will appear in the second half of 2021, in part from the winding down of the federal mortgage forbearance program and from more home building.”
All four U.S. regions registered both month-over-month increases and year-over-year gains for pending home sales contract transactions for the month of May.
The Northeast PHSI increased 15.5% to 98.5 in May, a 54.6% climb from a year ago. In the Midwest, the index grew 6.7% to 107.7 last month, up 7.8% from May 2020. Sales transactions in the South rose 4.9% to an index of 135.5, up 6.1% from May 2020, and the index in the West increased 10.9% to 102.0, up 12.5% from a year prior.
Out of the largest 40 metros, Realtor.com’s Hottest Housing Markets data revealed Tampa-St. Petersburg-Clearwater, Florida; Detroit-Warren-Dearborn, Michigan; Nashville-Davidson-Murfreesboro-Franklin, Tennessee; Riverside-San Bernardino-Ontario, California; and Jacksonville, Florida, were the most improved metros over the past year.
