Pending home sales strongly bounced back in May, approaching the highest ever for the month of May since 2005. All 4 US regions registered month-to-month increases and year-to-year gains for pending home sales contract transactions for the month of May.
The Pending Home Sales Index, or the PHSI, is a forward focused indicator of home sales based on contract signing, which in May rose from 8.0% to 114.7. Also, year-to-year signings rose to 13.1%.
May’s stark rise in transaction, April’s decline in transactions, and the sudden shift in home affordability was a shock to most. The new housing market is now attracting more and more homebuyers due to the increase in listing as well as the decline in mortgage rates, which fell below 3%.
Even though there have been countless issues throughout this past year, including a deadly world-wide pandemic, extremely high prices, and all-time low housing inventory, buyers are still eagerly lining up to purchase a home.
Although these issues have contributed to pricing out some potential buyers, soaring aggregate wealth from the elevated stock market and rising home prices are evidently contributing funds for home purchases. Throughout the second half of 2021, more and more listings will hit the market because of the lowering of the federal mortgage forbearance program and more home building.
Recent data from Realtors.com revealed out of the largest 40 metros, the most improved metros over the past year, as of June 29, were Tampa-St. Petersburg-Clearwater, Fla., Detroit-Warren-Dearborn, Mich., Nashville-Davidson-Murfreesboro-Franklin, Tenn., Riverside-San Bernardino-Ontario, Calif., and Jacksonville, Fla.
In the Northeast, the PHSI rose to 15.5% to 98.5 in May, a 54.6% rise from a year ago. The Midwest PHSI index increased from 6.7% to 107.7 2 months ago, up 7.8% from May 2020. Pending home sales in the South grew 4.9% to an index of 135.5 in May, up 6.1% from May 2020. In the West the index rose from 0.9% in May to 102.0, up 12.5% from a year prior.
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