Pending home sales across the nation made a major comeback in May, seeing encouraging record-breaking contract activity after two previous months of declines brought on by the increasing impact of the coronavirus pandemic.
The National Association of Realtors reported that every major region recorded an increase in month-over-month pending home sales transactions, while the South also experienced a year-over-year increase in pending transactions.
The Pending Home Sales Index, a barometer of home sales based on contract signings, rose 44.3% to 99.6 in May, chronicling the highest month-over-month gain in the index since its inception in January 2001. Year-over-year, contract signings fell 5.1%. An index of 100 is equal to the level of contract activity in 2001.
“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.”
He added, “More listings are continuously appearing as the economy reopens, helping with inventory choices,” Yun said. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”
The coronavirus pandemic blindsided the housing market during the traditional spring home-buying season. Sales of existing and new homes fell sharply as communities were locked down to prevent the spread of COVID-19 and consumers became more accustomed to social distancing protocols.
Technologies such as virtual reality tours, video chats and remote notarization have helped connect buyers and sellers.
Among the largest metro areas, active listings were up by more than 10% in May compared to April in several metro areas, including Urban Honolulu, Hawaii; San Francisco; San Jose, California, Denver and Colorado Springs, Colorado.
“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.
NAR now expects existing home sales to reach 4.93 million units in 2020 and new home sales to hit 690,000.
Yun said, “All figures light up in 2021 with positive GDP, employment, housing starts and home sales.” He noted that in 2021, sales are forecast to rise to 5.35 million units for existing homes and 800,000 for new homes.