U.S. Pending Home Sales Decline in May as Interest Rates Rise
by:Tom Moeller
|in:Economy in Brief
Summary
- Sales fall to five-month low.
- Most regions record declines.
The Pending Home Sales Index from the National Association of Realtors (NAR) weakened 2.7% in May (-22.2% y/y) to 76.5 from a little-revised 78.6 in April. The index has declined in each of the last three months and was 40.2% below its August 2020 high of 128.0. The index level in May was the lowest since December.
The decline in sales occurred as the average rate on a 30-year mortgage rose to 6.43% last month from 6.34% in April. That was the highest monthly average since 6.81% in November of last year. The rate rose to 6.67% last week.
In the West, sales declined 6.1% in May (-26.6% y/y) after rising 4.7% in April. Sales in the Midwest fell 5.3% last month (-23.5% y/y) after rising 3.8% in April. Home sales in the South weakened 4.4% (-19.6% y/y) in May after falling 0.8% in April. Moving the other way, pending home sales in the Northeast rose 12.9% (-21.9% y/y) last month and reversed an 11.3% April decline.
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 SURVEYW database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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