TRD Insights: What a record month for contracts says about the US housing market

NAR report shows that the South was the only region to clock monthly and yearly gains

New York Insights /
Jul.July 01, 2020 07:00 AM
NAR Pending Home Sales Index Up Record 44 Percent in May

NAR Pending Home Sales Index Up Record 44 Percent in May

Pending home sales in May sported the biggest monthly gain since the National Association of Realtors (NAR) began keeping track.

The NAR’s Pending Home Sales Index (PHSI) in May jumped 44.3 percent over the April level. That doesn’t mean activity is back to usual levels – May pending home sales were still about 5 percent below their May 2019 level.

“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 perent – even after missing the spring buying season due to the pandemic lockdown,” said NAR chief economist Lawrence Yun in a statement.

Pending home sales increased on a monthly basis in every region tracked by NAR, but fell slightly on an annual basis in all regions except for the South. There, May pending home sales increased 43 percent above their April level to an index of 125.5, which was up 1.9 percent from May 2019.

The index is based on a large sample of pending sales of existing homes. A sale is described as pending when a contract has been signed but the transaction hasn’t closed. Contract signings are a good predictor of closed sales in the next two or three months.

This report is one of the first signs of recovery in sales volume following three months of grim news. In April, NAR forecast a 40 percent decline in home sales in 2020, which Yun described as “an off the chart decline.” The numbers in May also haven’t been completely rosy: Home sales in South Florida dropped by half annually in May, and contract signings in Los Angeles dropped by 44 percent annually that month as well.


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