by Activity rises in the Midwest and South, while declining in the Northeast and West
WASHINGTON — May pending home sales rose 1.1% from May 2024, while also rising 1.8% from April, according to the National Association of Realtors.
Year-over-year pending sales rose in the Midwest and South, but declined in the Northeast and West, while they rose in all four regions from April, the NAR said, noting that that activity has been spurred by positive economic factors.
“Consistent job gains and rising wages are modestly helping the housing market,” said NAR Chief Economist Lawrence Yun. “Hourly wages are increasing faster than home prices. However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains.”
Yun also went on to explain some of the differences occurring by region.
“The Northeast’s housing shortage is boosting home prices, with more than a quarter of homes selling above list price,” he said. “Conversely, more inventory in the South gives homebuyers greater negotiation power. Price declines in the South should be considered temporary given the region’s strong job creation.”
The information is based on the Pending Home Sales Index, which the NAR describes as a forward-looking indicator of home sales based on home-contract signings. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
An index of 100 is equal to the level of contract activity in 2001, the first year that NAR examined pending home sales activity. That same year, the volume of existing-home sales fell within the range of 5 million to 5.5 million, which NAR noted is considered normal for the current U.S. population.
By region, the activity was as follows:
+ In the Northeast, there was a .5% decrease in pending home sales from May 2024 and a 2.1% increase from April.
+ In the Midwest, there was a 2.6% increase from May 2024 and a .3% increase from April.
+ In the South, there was a 2% increase from May 2024 and a 1% increase from April.
+ In the West, there was a 1.2% decrease from May 2024 and a 6% increase from April.
The NAR noted that while pending sale contracts are a good indicator of upcoming home sale closings, the amount of time between the contract and completed sales state varies. It noted the ability to close depends on a buyer’s ability to obtain mortgage financing, as well as issues with appraisals and/or home inspections.
Thus, until the closing actually happens, many buyers may be reluctant to make final furniture purchases. Still, the index is a strong indication that many pending home sales will be finalized within a short period of time, thus allowing furniture retailers to capture some business as people get ready to move into their new home.
