Pending Home Sales
Surge 44.3% in May
June 29, 2020
Pending home sales mounted a record
comeback in May, seeing encouraging contract activity after two previous
months of declines brought on by the coronavirus pandemic, according to
the National Association of Realtors®. Every major region recorded an
increase in month-over-month pending home sales transactions, while the
South also experienced a year-over-year increase in pending
The Pending Home Sales Index (PHSI), a forward-looking indicator of home
sales based on contract signings, rose 44.3% to 99.6 in May, chronicling
the highest month-over-month gain in the index since NAR started this
series in January 2001. Year-over-year, contract signings fell 5.1%. An
index of 100 is equal to the level of contract activity in 2001.
“This has been a spectacular recovery for contract signings, and goes to
show the resiliency of American consumers and their evergreen desire for
homeownership,” said Lawrence Yun, NAR’s chief economist. “This bounce
back also speaks to how the housing sector could lead the way for a
broader economic recovery.”
“More listings are continuously appearing as the economy reopens,
helping with inventory choices,” Yun said. “Still, more home
construction is needed to counter the persistent underproduction of
homes over the past decade.”
According to data from realtor.com®, among the largest metro areas,
active listings were up by more than 10% in May compared to April in
several metro areas, including Urban Honolulu, Hawaii; San Francisco,
Calif.; San Jose, Calif.; Denver, Colo.; and Colorado Springs, Colo.
“The outlook has significantly improved, as new home sales are expected
to be higher this year than last, and annual existing-home sales are now
projected to be down by less than 10% – even after missing the spring
buying season due to the pandemic lockdown,” Yun said.
NAR now expects existing-home sales to reach 4.93 million units in 2020
and new home sales to hit 690,000. “All figures light up in 2021 with
positive GDP, employment, housing starts and home sales.” Yun noted that
in 2021, sales are forecast to rise to 5.35 million units for existing
homes and 800,000 for new homes.
May Pending Home Sales Regional Breakdown
month of May saw each of the four regional indices rise on a
month-over-month basis after all were down in April 2020.
The Northeast PHSI grew 44.4% to 61.5 in May, although it was still down
33.2% from a year ago. In the Midwest, the index rose 37.2% to 98.8 last
month, down 1.4% from May 2019.
Pending home sales in the South increased 43.3% to an index of 125.5 in
May, up 1.9% from May 2019. The index in the West jumped 56.2% in May to
89.2, down 2.5% from a year ago.
The National Association of Realtors® is America’s largest trade
association, representing more than 1.4 million members involved in all
aspects of the residential and commercial real estate industries.