Pending home sales in May fell 0.5% compared with April and were down 2.2% compared with May 2017, according to the National Association of Realtors (NAR).
That resulted in a score of 105.9 on NAR’s Pending Home Sales Index.
In April, the index score was 106.4.
Regionally, pending home sales were up in the Northeast, Midwest and West, but a large decrease in the South more than offset those gains.
It was the second consecutive month that contract signings fell on a month-over-month basis. However, it is notable that the drop occurred during the spring home buying season.
The culprit, once again, was lack of supply.
“Pending home sales underperformed once again in May, declining for the second straight month and coming in at the second lowest level over the past year,” says Lawrence Yun, chief economist for NAR, in a statement. “Realtors in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.”
Yun says with home prices continuing to rise, “it’s clear the summer months will be a true test for the housing market.”
“One encouraging sign has been the increase in new home construction to a 10-year high,” he says.
Provided the job market and economy continue to improve as they have, consumers will continue to actively look to buy, “and any rise in inventory would certainly help them find a home,” he adds.
Yun now forecasts for existing-home sales in 2018 to decrease 0.4% to 5.49 million – down from 5.51 million in 2017.
The national median existing-home price is expected to increase around 5.0%.
In 2017, existing-sales increased 1.1% and prices rose 5.7%.
