Pending home sales decreased 2.7% in May compared with April and were down 22.2% compared with May 2022, according to the National Association of Realtors (NAR).
Regionally, and month over month, pending home sales jumped 12.9% in the Northeast; however, they dropped 5.3% in the Midwest, 4.4% in the South, and 6.1% in the West.
Year over year, pending home sales were down double digits in all four regions.
“Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing,” says Lawrence Yun, chief economist for NAR, in a statement. “The lack of housing inventory continues to prevent housing demand from being fully realized.
“It is encouraging that homebuilders have ramped up production, but the supply from new construction takes time and remains insufficient,” Yun adds. “There should be more focus on boosting existing-home inventory with temporary tax incentive measures.”
Ksenia Potapov, economist for First American, says the spring home-buying season “has struggled to gain momentum.”
“Mortgage rates remain high, reducing house-buying power and keeping existing homeowners rate-locked into their homes,” Potapov says. “As a result, the inventory of homes for sale, which typically increases throughout the spring and summer months, has remained near winter lows.
“The divide between the existing-home and new-home markets continues to grow,” Potapov says. “While existing-home sales remain muted, multiple leading indicators on the new-home side, including new-home sales, new-home construction, and homebuilder sentiment have trended higher.
“There is plenty of demand on the sidelines, the labor market remains strong, and potential home buyers are ready to jump in,” she adds. “While limited inventory is likely to hold back sales activity, the housing market remains resilient.”
Photo: Breno Assis