NAR: May’s pending home sales hit nine-year high

Charles Heaver

Tuesday, June 30, 2015

WASHINGTON – June 29, 2015 – Pending home sales continued to rise in May, and they're now at their highest level in over nine years, according to the National Association of Realtors® (NAR). Northeast and West gains were offset by small decreases in the Midwest and South.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings last month, climbed 0.9 percent to 112.6 in May from a slight downward revision of 111.6 in April. Year-to-year, it's now 10.4 percent above May 2014 (101.9). It has increased year-over-year for nine consecutive months and at its highest level since April 2006.

NAR Chief Economist Lawrence Yun says contract activity rose in May for the fifth straight month, increasing the likelihood that home sales are off to their best year since the downturn.

"The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring," says Yun. "It's very encouraging to now see a broad-based recovery with all four major regions showing solid gains from a year ago."

Yun has one warning: This year's stronger sales amidst similar housing supply levels from a year ago have caused home prices to rise to an unhealthy and unsustainable pace.

"Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages," adds Yun. "Without meaningful gains in new and existing supply, there's no question the goalpost will move further away for many renters wanting to become homeowners."

The PHSI in the Northeast increased 6.3 percent to 93.9 in May, and it's now 10.6 percent above a year ago. In the Midwest, the index declined 0.6 percent to 111.4, but it's still 7.8 percent above May 2014.

Pending home sales in the South decreased 0.8 percent to 127.8 in May but it's still 10.6 percent above last May. The index in the West rose 2.2 percent in May to 104.5 – 13.0 percent above a year ago.

© 2015 Florida Realtors®