Pending Home Sales Increased in May

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Pending home sales increased 1.1% in May compared with April, reaching a score of 105.4 on the National Association of Realtors’ Pending Home Sales Index.

The increase follows a decrease of 1.5% the previous month.

Regionally, contract signings increased 3.5% in the Northeast, 3.6% in the Midwest, and 0.1% in the South.

Sales were down 1.8% in the West.

Year-over-year, contract signings decreased 0.7%, marking the 17th straight month of annual decreases.

Lawrence Yun, chief economist for NAR, says lower mortgage rates helped boost pending home sales in May.

“Rates of four percent and, in some cases even lower, create extremely attractive conditions for consumers,” Yun says in a statement. “Buyers, for good reason, are anxious to purchase and lock in at these rates.”

With consumer confidence on the rise, Yun says he expects more activity in the coming months.

“The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points,” Yun says. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.”

The big question, of course, is will home builders ramp-up production?

“Homes are selling swiftly, and more construction will help keep home prices manageable and thereby allow more middle-class families to attain ownership opportunities,” Yun says.

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