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Outstanding home sales unexpectedly broke a six-month streak of falls in May, up 0.7% to a reading of 99.9, according to the National Association of Realtors.
Economists surveyed by Refinitiv expected a decline of 3.7%. An index of 100 is equal to the level of contractual activity in 2001.
A “Pending Sale” sign outside a home in Discovery Bay, California, on March 31, 2022. (David Paul Morris / Bloomberg via Getty Images / Getty Images)
At the regional level, contract signing rose 15.4% month-on-month in the Northeast, rose 0.2% month-on-month in the South, fell 1.7% month-on-month in the Midwest and contracted 5% in the Midwest. The figures show year-on-year decreases of 11.9%, 13.8%, 8.8% and 19.8%, respectively.
MORTGAGE RATES HAVE REACHED 5.81%, THE HIGHEST LEVEL SINCE NOVEMBER 2008
Despite the small gain from pending May sales, NAR chief economist Lawrence Yun warns that the housing market is “clearly in transition.” Contract signings fell 13.6% year-on-year in May, which Yun attributed to “much higher mortgage rates.”
The average commitment rate on a 30-year fixed-rate mortgage reached 5.81% last week, the highest level since November 2008.
According to NAR, at the average price of a single-family home with a down payment of 10%, the monthly mortgage payment has increased by about $ 800 since the beginning of the year, as mortgage rates have risen 2.5 percentage points since January.
“Trying to balance the housing market by stifling demand through higher mortgage rates is detrimental to consumers and the economy,” Yun added. “The best way to balance the market is to increase supply, which also helps the economy as a whole.”
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In May, sales of new family homes sold at a seasonally adjusted annual rate of 696,000 in May, up 10.7% from the April revision of 629,000, but below the estimate of May 2021 of 740,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development.
The average selling price of new homes sold in May 2022 was $ 449,000, while the average selling price was $ 511,400. The seasonally adjusted estimate of new homes for sale at the end of May was 444,000, representing a 7.7-month supply at the current sales rate.
Meanwhile, existing home sales fell at a seasonally adjusted annual rate of 5.41 million in May, 3.4% less than the previous month. Year-on-year, sales of existing homes fell 8.6%. The average price of existing housing for all types of housing in May was $ 407,600, up 14.8% from May 2021, as prices rose in all regions.
The total existence of housing was 1.16 million units at the end of May, 12.6% more than in April, but 4.1% less than the previous year. Unsold inventory stands at a 2.6-month supply at the current pace of sales, up from 2.2 months in April and 2.5 months in May 2021.