Pending home sales fell 2.7% in May from the previous month, according to the National Association of Realtors (NAR). While sales increased in the Northeast, three regions posted monthly losses and all four regions saw year-over-year transaction declines.
“Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing. The lack of housing inventory continues to prevent housing demand from being fully realized,” says NAR chief economist Lawrence Yun.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, dropped to 76.5 in May. Year over year, pending transactions fell by 22.2%. An index of 100 is equal to the level of contract activity in 2001.
“It is encouraging that home builders have ramped up production, but the supply from new construction takes time and remains insufficient,” adds Yun. “There should be more focus on boosting existing-home inventory with temporary tax incentive measures.”
In the Northeast, the PHSI climbed 12.9% from last month to 66.7, a decrease of 21.9% from one year ago. The Midwest index dropped 5.3% to 74.4 in May, down 23.5% from last year.
The South’s PHSI decreased 4.4% to 94.4 in May, decreasing 19.6% from the prior year. Falling 26.6% from May 2022, the West index fell 6.1% in May to 58.4.
