New home sales soared and existing home sales plunged, leaving pending home sales as the tie-breaker for May's picture of the US housing market. After crashing by over 20% MoM in both March and April, analysts expected a 19.3% rebound MoM in May but instead it exploded by a record 44.3% MoM...but pending home sales remain down 10.4% YoY...
Pending sales represents signed contracts in the month of May, when mortgage rates had collapsed.
“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist.
“This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
The month of May saw each of the four regional indices rise on a month-over-month basis after all were down in April 2020.
The Northeast PHSI grew 44.4% to 61.5 in May, although it was still down 33.2% from a year ago.
In the Midwest, the index rose 37.2% to 98.8 last month, down 1.4% from May 2019.
Pending home sales in the South increased 43.3% to an index of 125.5 in May, up 1.9% from May 2019.
The index in the West jumped 56.2% in May to 89.2, down 2.5% from a year ago.
NAR now expects existing-home sales to reach 4.93 million units in 2020 and new home sales to hit 690,000.
“All figures light up in 2021 with positive GDP, employment, housing starts and home sales.
More listings are continuously appearing as the economy reopens, helping with inventory choices,” Yun said.
However we note that despite the record rebound, the pending home sales index remains below 2001 levels...
Yun noted rather optimistically, that in 2021, sales are forecast to rise to 5.35 million units for existing homes and 800,000 for new homes.
“The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10% – even after missing the spring buying season due to the pandemic lockdown,” Yun said.
There's still 20-plus million more unemployed Americans! What's that old saying about it being difficult to get a man to understand something, when his salary depends upon his not understanding it!