Connect with us

Hi, what are you looking for?

The American Genius Real EstateThe American Genius Real Estate

NAR Reports

Pending home sales “skid” after nearly two years of increases

(HOUSING NEWS) – Pending home sales may have dipped slightly in May, but it’s nothing dramatic. Let’s talk about why this is happening.

Pending home sales (contracts signed) took a “skid” in May, according to the National Association of Realtors (NAR). This hiccup follows three consecutive months of increases, and nearly two years of year-over-year increases. All four regions saw a dip in contract activity as the Pending Home Sales Index (PHSI) slid 3.7 percent.

NAR is quick to point out that despite last month’s dip, the index remains the third highest reading in the past year, declining year-over-year for the first time since August 2014.

bar
Dr. Lawrence Yun, NAR chief economist said, “With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity.”

“Realtors® are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market,” Dr. Yun observed.

The challenge now is supply, not demand

He notes that home prices are at an all time high, inventory levels remain low, which he says is creating an availability and affordability crunch that’s preventing what should be a more robust pace of sales.

“Total housing inventory at the end of each month has remarkably decreased year-over-year now for an entire year,” adds Yun. “There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth.”

The Northeast took the biggest hit

The PHSI fell 5.3 percent in the Northeast, unchanged from a year ago. The Midwest saw a 4.2 percent drop, falling 1.8 percent below May 2015.

Contract activity slid 3.1 percent in May, but are actually 0.6 percent higher than last May. In the West, the PHSI fell 3.4 percent, marking a 0.1 percent drop from May 2015.

Looking forward

Despite this “skid,” existing home sales are still expected to rise this year, which NAR projects will hit 5.44 million (3.7 percent higher than 2015).

The pace of housing prices is projected to moderate to between 4.0 and 5.0 percent this year compared to 6.8 percent last year.

Contract activity for May took a slight hit, but it’s no cause for alarm.

#PHSI

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Advertisement

The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox.

Advertisement

KEEP READING!

National Association of Realtors

Realtor safety is of upmost importance to those in the field, especially to those at NAR. Here's how they're helping to save lives.

Real Estate Big Data

Home sales are sliding after an overheated 2021, will this trend continue?

Real Estate Associations

EXCLUSIVE: Why is NAR leaving Las Vegas for next year's massive conference, and where will it now be?

Real Estate Brokerage

As rules surrounding workers' independent contractor status are aimed at gig workers at Uber and elsewhere, how could this impact the practice of real...

The American Genius' real estate section is honest, up to the minute real estate industry news crafted for industry practitioners - we cut through the pay-to-play news fluff to bring you what's happening behind closed doors, what's meaningful to your practice, and what to expect in the future. We're your competitive advantage. The American Genius, LLC Copyright © 2005-2022