After reporting steep drops in U.S. pending home sales over the past several months, the National Association of Realtors released a report on Monday showing an unexpected rebound in pending home sales in the month of May.
NAR said its pending home sales index climbed 0.7 percent to 99.9 in May after plunging by 4.0 percent to a revised 99.2 in April. The increase surprised economists, who had expected pending home sales to tumbled by another 3.7 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” said NAR Chief Economist Lawrence Yun. “Contract signings are down sizably from a year ago because of much higher mortgage rates.”
The unexpected increase in pending home sales came as pending home sales in the Northeast spiked by 15.4 percent compared to the previous month.
Pending home sales in the South also edged up by 0.2 percent, while pending home sales in the Midwest slumped by 1.7 percent and pending home sales in the West plunged by 5.0 percent.
“The largest decline in contract activity was observed in the West region, where homes are the most expensive,” Yun said.
He added, “This further indicates the growing need to increase supply to tame home price growth and improve the chances of ownership for potential home buyers.”
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