The National Association of Realtors® (NAR) is reporting that their Pending Homes Sales Index (PHSI), which is based on signed real estate contracts, not actual closings, for existing single-family homes, condos, and co-ops, increased 8.0% to a reading of 114.7 in May. Year-over-year, signings increased 13.1%. An index of 100 is equal to the level of contract activity in 2001. In a statement prepared for the release of the PHSI, Lawrence Yun, NAR’s chief economist said, “May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise. The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings.” Yun went onto say Although there has been a series of obstacles over the last year, including an unprecedented pandemic, record-high prices and all-time low inventory, buyers are still lining up at a feverish pace. “While these hurdles have contributed to pricing out some would-be buyers, the record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases. More market listings will appear in the second half of 2021, in part from the winding down of the federal mortgage forbearance program and from more home building. Yun continued, “Home price growth will steadily moderate with increased supply, but a broad and prolonged decline in prices is unlikely. However, if a reduction occurs in some markets, homebuyers will view the lower home price as a second-chance opportunity to get into the market after being outbid in previous multiple-bid market conditions.”
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Pending Home Sales Bounce Back 8.0% in May