U.S. Pending Homes Sales Drop 2.1% in May 2024

On Thursday (6-27-24), The National Association of Realtors® (NAR) reported their Pending Homes Sales Index (PHSI) for May 2024. The PHSI is based on signed real estate contracts, not actual closings, for existing single-family homes, condominiums, and co-ops, fell 2.1% month-over-month (Apr. 24 – May 24) dropping to a reading of 70.8 in May. An index of 100 is equal to the level of contract activity in 2001. Year-over-year (May. 23 – May. 24) pending homes sales were down 6.6%.

NAR is reporting that in May, two out of the four reporting regions reported month-over-month gains. All four regions posted year-over- year losses. The Northeast PHSI increased 1.1% in May to a reading of 63.6 but when compared to May 2023, it was 2.3% lower. The Midwest PHSI inched 0.4% lower to a reading of 70.4 in May and was down 5.6% year-over-year. The South region PHSI dropped 5.5% in May to a reading of 83.7 and was 10.4% below the May 2023 levels. The West region PHSI increased 1.4% in May to a reading of 56.7 but was down 2.1% year-over-year.

NAR is predicting that mortgage rates will remain above 6% in 2024 and 2025, even with the Federal Reserve cuts to the Fed Funds rate.

NAR forecasts that existing-home sales will rise to 4.26 million in 2024 (from 4.09 million 2023) and to 4.92 million in 2025 (from 2024). Housing starts are expected to rise to 1.382 million in 2024 (from 1.413 million in 2023) and to 1.492 million in 2025 (from 2024).

Finally, NAR anticipates the median existing-home price will increase to a record annual high of $405,300 in 2024 – up from $389,800 in 2023 and to $412,000 in 2025 – up from 2024). NAR forecasts an increase in the median new home price to $434,100 in 2024 – up from $428,600 in 2023 and $441,200 in 2025 from 2024.