From floridarealtors.org
After steadily increasing for three straight months, pending home sales letup in May and declined year-over-year for the first time in almost two years, according to the National Association of Realtors.
All four U.S. regions experienced a cutback in contract activity.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, slid 3.7 percent to 110.8 in May from a downwardly revised 115.0 in April and it’s now slightly lower (0.2 percent) than May 2015 (111.0).
Even with last month’s decline, however, the index reading is still the third highest in the past year, though it declined year-over-year for the first time since August 2014.
“With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,” says Lawrence Yun, NAR chief economist.
“Buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market,” he said.
Despite mortgage rates hovering around three-year lows for most of the year, Yun says scant supply and swiftly rising home prices — which surpassed their all-time high last month — are creating an availability and affordability crunch that’s preventing what should be a more robust pace of sales.
Yun says the fallout from the U.K.’s decision to leave the European Union breeds both immediate opportunity as well as potential headwinds for the U.S. housing market.
Pending sales in the Northeast dropped 5.3 percent to 93.0 in May, and are now unchanged from a year ago. In the Midwest, the index slipped 4.2 percent to 108.0 in May and is now 1.8 percent below May 2015.
Pending home sales in the South declined 3.1 percent to an index of 126.6 in May but they’re still 0.6 percent higher than last May.
The index in the West decreased 3.4 percent in May to 102.6 and is now 0.1 percent below a year ago.