Pending home sales in the South fell to their lowest level in six months in May, marking a significant decline in the housing market, according to the latest data from the National Association of Realtors.
- The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, dropped to 83.7 in May, down 5.5% from April. This is the lowest level since November 2023.
Nationally: The PHSI decreased to 70.8 in May, down 2.1% from April, reaching its lowest level since April 2020. This decline was well below economists’ expectations of a 2.5% rise for May. The unexpected downturn in pending home sales highlights ongoing challenges in the housing market, indicating potential headwinds for the broader market, including fluctuating demand and inventory levels.
Mixed Month: The month of May presented a mixed picture. The South and Midwest experienced declines, with the Midwest’s PHSI falling by 0.4%. In contrast, the Northeast and the West saw increases of 1.1% and 1.4%, respectively. These regional disparities suggest that local market conditions significantly influence the housing sector’s dynamics.
What They’re Saying: Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), commented on the market’s current state, saying, “The market is at an interesting point with rising inventory and lower demand. Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”
Looking Ahead: Higher prices and interest rates continue to price many wannabe buyers out of the market. However, with inflation showing signs of growth and inventory levels rising some economists are wondering if we might soon see a reduction in rates and a slight reduction in home prices.
