submitted by the Prescott Area Association of REALTORS®
Contract signings rose nearly 4%, offering up a “late-spring buyer rush” that economists hope will drive a broader recovery in home sales.
More buyers entered into contracts for a home in May, the latest sign the housing market could be on the mend after four sluggish years for home sales.
The National Association of REALTORS®’ Pending Home Sales Index showed contract signings — a gauge of future home sales — rose 3.8% in May compared to April and were up nearly 5% from a year ago. All four major regions across the U.S. saw an uptick in pending home sales, led by 8% monthly increases in the Northeast and Midwest. The national group also reported that existing-home sales — which reflects closed sales — saw a 3.2% increase, marking one of the best figures for sales data in the past three years.
“A late-spring buyer rush — even with mortgage rates not budging — is an indication of pent-up housing demand and consumers’ acceptance of above-6% mortgage rates as the new normal,” says NAR’s Chief Economist Lawrence Yun.
Buyers could even see a slight reprieve in rates: “Going forward, falling oil prices will help lower mortgage rates,” says Yun, although he added any rate declines likely would be modest.
Market Acceptance
Homebuyers are readjusting their budgets as they also contend with higher home prices. NAR reported that the median existing-home price for all housing types climbed to $429,300, the highest ever recorded for the month of May. However, that represented a 1.3% annual increase, which actually signaled a cooling in home price growth compared to prior years.
A limited number of homes for sale remains a key driver of home price growth in many markets. But buyers may be better positioned to absorb those increases. Income and wages have been rising at roughly a 3% to 4% annual pace, helping to offset higher prices.
Yun noted at a press conference that housing inventories would need to rise about 30% to meaningfully ease conditions for homebuyers.
The Midwest led in existing-home sales monthly gains in May, up 6.4%. The trend will likely continue given the region also saw pending home sales rise 8.1% the month before. The region continues to offer some of the nation’s most affordable home prices at a median of $336,300.
Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission.
