Pending Home Sales Unexpectedly Break Six-month Losing Streak In May

By FOX Business
Posted on 06/27/22 | News Source: FOX Business

Pending home sales unexpectedly broke a six-month streak of declines in May, climbing 0.7% to a reading of 99.9, according to the National Association of Realtors.
Economists surveyed by Refinitiv were expecting a decline of 3.7%. An index of 100 is equal to the level of contract activity in 2001.

On a regional basis, contract signings jumped 15.4% month over month in the Northeast, increased 0.2% month over month in the South, fell 1.7% month over month in the Midwest and contracted 5% in the Midwest. The figures mark year-over-year declines of 11.9%, 13.8%, 8.8% and 19.8%, respectively. 

Despite May's small gain in pending sales, NAR chief economist Lawrence Yun warns that the housing market is "clearly undergoing a transition." Contract signings fell 13.6% on a year-over-year basis in May, which Yun attributed to "much higher mortgage rates." 

The average commitment rate for a 30-year, fixed-rate mortgage hit 5.81% last week, the highest level since November 2008. 

According to NAR, at the median single-family home price and with a 10% down payment, the monthly mortgage payment has increased by about $800 since the beginning of the year as mortgage rates have climbed by 2.5 percentage points since January.

"Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy," Yun added. "The better way to balance the market is through increased supply, which also helps the broader economy."