A sign for a home for sale states that the home is under contract in Washington, DC.
Saul Loeb | AFP | Getty Images
According to the National Association of Realtors, pending home sales, a measure of signed contracts for existing homes, rose slightly in May, at 0.7% from April.
This broke a six-month streak of declining demand. Sales were still 13.6% lower than in May 2021.
Buyers have struggled with rising mortgage rates since the beginning of this year, but rates actually eased slightly in May, which could explain the increase in sales. There have also been more offerings on the market, and overall active inventory has also increased as some homes have been on the market longer.
The average for 30-year fixed mortgages peaked at 5.64% in the first week of the month, but then dropped to 5.25% by the end of the month, according to Mortgage News Daily. By mid-June, it had risen again to just over 6%.
“Despite a slight increase in pending sales compared to the previous month, the housing market is clearly in transition,” said Lawrence Yun, chief economist at the real estate agency. “Contract signings are down significantly from last year due to much higher mortgage rates.”
According to Realtor.com, the supply of homes for sale is finally on the rise, up 21% from last year. However, this is still about half of the pre-Covid level. The median listing price last week also rose by about 17% year-on-year and remained stable for the third week in a row.
Regionally, pending home sales were up 15.4% in the northeast month-on-month and down 11.9% from May 2021. In the Midwest, sales fell 1.7% on the month and are down 8.8% year-over-year.
In the south, sales were up 0.2% month-on-month and down 13.8% year-on-year. Sales fell the most in the West, where houses are the most expensive: down 5.0% in a month and 19.8% less than a year earlier.
“Despite the fact that interest rates fell during the month, the cost of financing a home purchase remained high,” said George Ratiu, manager of economic research at Realtor.com. “In mid-2022, real estate markets reflect an economy heading towards a post-pandemic reality.”