Pending home sales inched up +0.7% in May, according to the National Association of REALTORS® (NAR).
Slight Increase in Pending Home Sales in May
Pending home sales crept up +0.7% m/m to 99.9 in May 2022 but were down -13.6% y/y, according to the National Association of REALTORS (NAR). This +0.7% rise in pending home sales was seen by many industry experts as a “mere respite” in a downward trending housing market as mortgage rates climb.
Lawrence Yun, NAR’s Chief Economist, cautioned industry professionals and consumers to not get carried away with this slight increase in pending sales. Yun said, “Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition. Contract signings are down sizably from a year ago because of much higher mortgage rates.”
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Mortgage Rates Up +2.5% Since January
NAR data indicates that monthly mortgage payments have increased by approximately $800 since the beginning of 2022.
Yun said, “Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy. The better way to balance the market is through increased supply, which also helps the broader economy.
NAR indicated that at the median single-family home price with a 10% down payment, the monthly mortgage payment has risen approximately $800 since the beginning of 2022.
Softening Demand = Result of Inflation
George Ratiu, Realtor.com’s senior economist, said, “With inflation taking a bigger bite out of consumers’ paychecks each month and the Federal Reserve fully engaged in cooling the heat on prices, Americans’ ability to borrow is being sharply curtailed. The result is softening housing demand, which comes at the same time many homeowners are embracing the new normal and listing their homes for sale.”
“In the process,” Ratiu continued, “housing markets are experiencing a familiar shift – With rising inventory and slowing sales, a growing share of homes lingers longer on the listing portals, leading to price reductions…(this) is a welcome development for home shoppers who have been waiting for the window of buying opportunities to open wider.”
Regional Pending Sales in May
Regionally, home sales rebounded in the Northeast and South in May while home sales decreased in the Midwest and West. Take a look:
- Northeast – +15.4% to 86.4 on Pending Home Sales Index – -11.9% y/y
- South – +0.2% to 119.0 – -13.8% y/y
- Midwest – -1.7% to 98.6 – -8.8% y/y
- West – -5.0% to 81.6 – -19.8% y/y
Thanks to the National Association of REALTORS®, National Mortgage News and Inman.
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