Pending U.S. home sales fall to an all-time low in May
Pending U.S. home sales fall to an all-time low in May
The numbers: Pending home sales fell in May to an all-time low, as U.S. home buyers grappled with elevated mortgage rates and rising home prices.
Pending home sales fell 2.1% in May from the previous month, according to the monthly index released Thursday by the National Association of Realtors (NAR).
Pending home sales reflect transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed. Economists view it as an indicator for the direction of existing-home sales in subsequent months.
Contract signings fell to a record low, the NAR said, since it began tracking sales data since 2001. Sales also fell for the second month in a row.
The sales pace fell short of expectations on Wall Street. Economists were expecting pending home sales to fall 0.4% in May.
Transactions were down 6.6% from a year ago.
The NAR also laid out its forecast for the housing market in the months ahead. It expects the 30-year mortgage rate to remain over 6% this year, as well as in 2025, despite a potential rate cut by the Federal Reserve.
It also expects existing-home sales to be 4.26 million in 2024 and 4.92 million in 2025.
And home prices are expected to continue to climb, NAR said. It expects the median existing-home price to rise to an annual high of $405,300 in 2024 and to $412,000 in 2025.
Big picture: The spring home-buying season has been tough for the real-estate industry. Sales of homes have been muted, the key drivers being lower-than-normal housing inventory and home prices setting new record highs, both of which are making it tough for home buyers.
To be sure, inventory showed signs of growing in May, which could impact sales moving forward. New listings rose 13% in May, as compared with the previous year, real-estate brokerage Zillow said, which was a sign that the lock-in effect was “lessening over time.”
“In the second half of 2024, look for moderately lower mortgage rates, higher home sales and stabilizing home prices,” he added.