After modest bounces in existing and new home sales (despite weakness in starts and permits and mortgage application declines), pending home sales in May tumbled 0.8% MoM and were revised even lower (-1.7%) in April. This dismal print was below all economists' expectations, missing by 4 standard deviations.
This is the 3rd straight monthly drop and 2nd straight annual decline in pending home sales.
The biggest MoM decline was in The West (down 1.3%), but as the chart below shows, Pending Home Sales are now unchanged since June 2013.
The index is now 1.7 percent below a year ago, which marks the second straight annual decline and the most recent since November and December of last year.
NAR notes that prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.
Weaker financial and economic confidence could also be playing a role in the slowdown in contract activity. NAR's quarterly Housing Opportunities and Market Experience (HOME) survey, released earlier this week, found that fewer renters think it's a good time to buy a home, and respondents overall are less confident about the economy and their financial situation than earlier this year.
"Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales."