Pending home sales surged in May, increasing 8% compared with April and up 13.1% compared with May 2020, according to the National Association of Realtors (NAR).
Regionally, and month over month, pending home sales were up 15.5% in the Northeast, 10.9% in the West, 6.7% in the Midwest and 4.9% in the South.
“May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise,” says Lawrence Yun, chief economist for NAR, in a statement. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3 percent, and from an uptick in listings.”
Although there has been a series of obstacles over the last year, including an unprecedented pandemic, record-high prices and all-time low inventory, buyers are still lining up at a feverish pace, Yun says.
”While these hurdles have contributed to pricing out some would-be buyers, the record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases,” Yun says. “More market listings will appear in the second half of 2021, in part from the winding down of the federal mortgage forbearance program and from more home building.
“Home price growth will steadily moderate with increased supply, but a broad and prolonged decline in prices is unlikely,” Yun adds. “However, if a reduction occurs in some markets, homebuyers will view the lower home price as a second-chance opportunity to get into the market after being outbid in previous multiple-bid market conditions.”
Photo: Cytonn Photography