Pending home sales decreased 2.1% in May compared with April and were down 6.6% compared with May 2023, as higher mortgage rates continued to keep homebuyers on the sidelines, according to the National Association of Realtors (NAR).
Regionally, and month over month, contract signings declined in the Midwest and South but increased in the Northeast and West.
Year-over-year, all U.S. regions saw ending sales decline.
“The market is at an interesting point with rising inventory and lower demand,” says Lawrence Yun, chief economist for NAR, in a statement. “Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”
NAR predicts mortgage rates will remain above 6% in 2024 and 2025, even with the Federal Reserve cuts to the Fed Funds rate.
The association forecasts that existing-home sales will rise to 4.26 million in 2024 – up from 4.09 million 2023 – and to 4.92 million in 2025.
Housing starts are expected to rise to 1.382 million in 2024 – up from 1.413 million in 2023 – and to 1.492 million in 2025.
NAR anticipates the median existing-home price will increase to a record annual high of $405,300 in 2024 – up from $389,800 in 2023 – and to $412,000 in 2025.
NAR forecasts increases in the median new home price to $434,100 in 2024 – up from $428,600 in 2023 – and $441,200 in 2025.
“The first half of the year did not meet expectations regarding home sales but exceeded expectations related to home prices,” Yun says. “In the second half of 2024, look for moderately lower mortgage rates, higher home sales and stabilizing home prices.”
Photo: Gabrielle Henderson