Pending home sales soared back in May, rising 44.3%—the highest monthly gain since 2001—the National Association of Realtors (NAR) reports.
Annually, contract signing fell 5.1%.
“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.”
Yun added more listings are “continuously appearing” as the economy reopens. However, home construction is needed to “counter the persistent underproduction of homes over the past decade.”
The NAR previously reported that pending home sales fell 21.8% in April and annual contract signings fell 33.8%.
April was the second straight month of declines in the industry, with each major area in the nation reporting lesser numbers in both month-over-month contract activity, as well as far fewer year-over-year pending home sales transactions.
Danielle Hale, Chief Economist, realtor.com said buyers took advantage of low mortgages rates in May.
“New home sales took a similar upward turn last week, but today's pending data is a more important indicator of market activity since it covers existing homes which made up roughly 80 to 90% of sales in recent years. This move confirms that May closings could represent a low-point for home sales, with June and July numbers looking much better,” Hale said.
According to data from realtor.com, metros seeing active listings grow by more than 10% in May were 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.
The NAR now expects existing-home sales to reach 4.93 million units in 2020 and new home sales to hit 690,000.
Pending home sales in the northeast grew 44.4% in May but is still down 33.2% from last year.