Skip to main content

Pending Home Sales Rose 0.7% In May, Ends 6-Month Decline

David Krechevsky
Jun 27, 2022
Pending Home Sales May 2022

Year-over-year, contract activity slid in all four major regions.

  • Pending home sales broke a six-month skid with a slight rise of 0.7% from April.
  • Compared to a year ago, three out of four regions — Northeast, South, and West — posted double-digit pending sales declines, while sales dropped by 8.8% in the Midwest.
  • Pending sales in the Northeast accelerated 15.4% in May, the largest monthly increase among the four major U.S. regions.

Pending home sales inched higher in May, breaking a six-month streak of declines, the National Association of Realtors said today. Year-over-year, however, transactions fell 13.6%.

Regionally, month-over-month results were mixed, with pending sales increasing in the Northeast and South while falling in the Midwest and West. Year-over-year, contract activity slid in all four major regions.

The Pending Home Sales Index (PHSI) — a forward-looking indicator of home sales based on contract signings — ticked up 0.7% to 99.9 in May, NAR said. An index of 100 is equal to the level of contract activity in 2001.

NAR Chief Economist Lawrence Yun said that, despite the small monthly gain in pending sales, “the housing market is clearly undergoing a transition. Contract signings are down sizably from a year ago because of much higher mortgage rates."

According to NAR, based on the median single-family home price and with a 10% down payment, the monthly mortgage payment has increased by about $800 since the start of the year as mortgage rates have climbed by 2.5 percentage points since January.

"Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy," Yun said. "The better way to balance the market is through increased supply, which also helps the broader economy."

While the housing market remains unbalanced nationwide with demand far outpacing supply, Yun said variations in home prices and affordability contributed to the regional differences in pending sales activity in May. 

Compared to a year ago, three out of four regions — Northeast, South, and West — posted double-digit pending sales declines.

"The largest decline in contract activity was observed in the West region, where homes are the most expensive," he said. "This further indicates the growing need to increase supply to tame home-price growth and improve the chances of ownership for potential home buyers."

The Northeast PHSI jumped 15.4% in May compared to April to 86.7, but that was down 11.9% from May 2021. The South PHSI increased 0.2% to 119.0 in May, a 13.8% drop from the previous year. The West index contracted 5% in May to 81.6, but was down 19.8% from May 2021.

The Midwest index retreated 1.7% to 98.6 in May, a decline of 8.8% from a year ago.

The National Association of Realtors is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.

Jun 27, 2022
MBA Revises Originations Forecast Downward For 2023

Now predicts lenders will originate $1.98 trillion overall in mortgages in 2023, down 12% from 2022 and down 3.5% from its October forecast.

Analysis and Data
Nov 29, 2022
Home Price Growth Continued To Slow In 3Q

FHFA, S&P Case-Shiller indexes show slower monthly and annual growth in prices.

Analysis and Data
Nov 29, 2022
First American: Real House Prices Up Yet Again

The monthly RHPI report said potential sellers are unlikely to lose all the equity they have gained.

Analysis and Data
Nov 28, 2022
Redfin: Pandemic Boomtowns Are Cooling

Home-price growth has slowed fastest in pandemic boomtowns like Austin, Phoenix and Boise, with inflation and high mortgage rates to blame.

Analysis and Data
Nov 28, 2022
Mortgage Application Payments Rose 3.7% In October

Mortgage payments are up by $629 in the first 10 months of the year, a 45.5% increase.

Analysis and Data
Nov 22, 2022
Investor Interest In Housing Market Cools

Investors lost market share for the second quarter in a row.

Analysis and Data
Nov 22, 2022