U.S. Pending Home Sales Decline Again in May
Summary
- May PHSI at a record low; two straight m/m declines after rises in Mar. and Feb.
- Home sales fall m/m in the Midwest and South but rebound in the Northeast and West.
- Home sales decline y/y in the four regions, w/ the deepest fall in the South (-10.4%).
The Pending Home Sales Index, a forward-looking measure of home sales based on contract signings, fell 2.1% m/m in May after an unrevised 7.7% drop in April and a 3.6% increase in March, according to the National Association of Realtors (NAR). The May PHSI at 70.8 was the lowest level on record. The year-on-year rate of decline was at -6.6% in May, less severe than -7.4% in April and -22.2% in May 2023. Nevertheless, the PHSI had fallen 43.4% since its October 2021 high of 125.1 and 44.7% since its August 2020 peak of 128.0.
The fall in May sales occurred as the average rate on a 30-year mortgage rose to 7.06% in May, the highest since November 2023, from 6.99% in April. Those rates were well above a low of 2.68% averaged in December 2020. Notably, weekly data showed the 30-year mortgage rate eased to a still-high 6.86% in the June 27 week from 6.87% in the June 20 week.
Month-on-month changes in pending home sales in May were mixed. Sales in the South fell 5.5% (-10.4% y/y) in May following a 7.6% drop in April and two consecutive m/m increases. Sales in the Midwest slid 0.4% (-5.6% y/y) on top of a 9.5% April decrease, registering the three straight m/m slide and the fourth in five months. To the upside, sales in the West rose 1.4% (-2.1% y/y) in May after an 8.5% drop in April and sales in the Northeast rose 1.1% (-2.3% y/y) following a 3.5% April decline; both posted the second m/m gain in three months.
The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.
The series dates back to 2001 and are available in Haver's PREALTOR database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the WEEKLY database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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