After an unexpected jump in new home sales and larger than expected drop in existing home sales, today's pending home sales print is the tie-breaker for sentiment in the housing market in May as homebuilder sentiment soured and mortgage rates and applications soared. As it turns out pending home sales unexpectedly rose 0.7% MoM in May (versus a 4.0% MoM expected drop) and with a downward revision to April from -3.9% MoM to -4.0% MoM...
This ends a 6 month streak of declines and some wondered if the brief drop in mortgage rates during May could have sparked the modest rebound (of course, as we show below, rates soared since).
“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” NAR’s chief economist Lawrence Yun said in a statement.
Pending home sales are still down around 12% YoY...
The NAR noted that at the median single-family home price and with a 10% down payment, the monthly mortgage payment has increased by about $800 since the beginning of the year.
By region, contract signings in the Northeast and South rose, while those in the Midwest and West declined, NAR said. All four areas were down from a year ago.
And finally, bear in mind that this is May's data, the fecal matter hit the rotating object even more in June...
Will the growth scare narrative win and limit the pain from here or will Powell reinforce the inflation-fighting narrative and send rates higher still... and affordability even lower.