The National Association of Realtors announced on Wednesday that the U.S. pending home sales index rose 3.8% in May, surpassing the 0.8% forecast. Year-over-year pending home sales increased 4.8%, exceeding the 3.0% expectation, with gains across all regions including the Northeast, Midwest, South, and West. NAR Chief Economist Dr. Lawrence Yun attributed the rise to pent-up housing demand and consumers' acceptance of mortgage rates above 6% as the new normal. The data signals potential stabilization in the U.S. housing market, which has faced significant weakness over the past two years due to rising prices and high mortgage rates that priced out many potential buyers.
Pending Home Sales Index Exceeds Forecasts in May
The U.S. pending home sales index rose 3.8% in May, according to the National Association of Realtors. Economists had expected only a 0.8% increase. April's figure was revised down to 0.3% from the previously reported 1.4%.
For the year, pending home sales rose 4.8% compared to expectations for a 3.0% increase and following the unrevised 3.2% increase in April. Month-over-month and year-over-year pending home sales rose across all four regions: the Northeast, Midwest, South, and West.
Economists pay close attention to pending home sales because the report serves as a leading indicator of existing home sales, given that contracts are signed a few months before homes are actually sold.
NAR Economist Cites Pent-Up Demand and Supply Constraints
"A late spring buyer rush---even with mortgage rates not budging---is an indication of pent-up housing demand and consumers' acceptance of above-6% mortgage rates as the new normal," said NAR Chief Economist Dr. Lawrence Yun. "The inventory-constrained Northeast region, which has seen faster home price growth but slower home sales for several months, is now showing more buyer contract signings. More supply is needed to help moderate home price growth."
Yun added, "Going forward, falling oil prices will help lower mortgage rates. But declines will be modest given sizable borrowing by the federal government and strong AI investment spending by tech companies."
Spot Gold Rises Following Housing Data Release
Spot gold rose closer to its session high of $4,349.60 in the minutes following the housing data release. It last traded at $4,344.08 per ounce for a gain of 0.34% on the day.
FAQ
What did the National Association of Realtors report about pending home sales in May?
The National Association of Realtors reported that the U.S. pending home sales index rose 3.8% in May, exceeding the 0.8% forecast. Year-over-year, pending home sales increased 4.8%, surpassing the 3.0% expectation, with gains across the Northeast, Midwest, South, and West regions.
Why did pending home sales rise according to NAR Chief Economist Dr. Lawrence Yun?
Dr. Lawrence Yun attributed the rise to pent-up housing demand and consumers' acceptance of mortgage rates above 6% as the new normal. He noted that even with mortgage rates not budging, a late spring buyer rush occurred, particularly in the inventory-constrained Northeast region.
How did spot gold react to the pending home sales data?
Spot gold rose closer to its session high of $4,349.60 in the minutes following the housing data release, last trading at $4,344.08 per ounce for a gain of 0.34% on the day.
