After
rising

in
March,

pending
home
sales
continued
to
slide
in
May,
with
the
Pending
Home
Sales
Index
(PHSI)
posting
its
second
consecutive
month
of
declines
to
reach
a
record
low,
according
to

data
released
Thursday
by
the National
Association
of
Realtors (NAR). 

The
PHSI
fell
2.1%
from

April
to
a
reading
of
70.8
in
May,
which
was
down
6.6%
on
a
yearly
basis.

An
index
of
100
is
equal
to
the
level
of
contract
activity
in
2001.
According
to
industry
analysts,
this
is
the
lowest
index
reading
recorded
since
NAR
began
collecting
the
data
in
2001.

Experts
attribute
the
drop
in
pending
home
sales
to
mortgage
rate
volatility.

“Pending
sales
are
a
forward-looking
indicator
of
home
sales
based
on
contract
signings,
so
two
consecutive
months
of
declining
pending
home
sales
suggest
a
negative
outlook
for
sales
activity,”

Odeta
Kushi,

First
American’s
deputy
chief
economist,
said
in
a
statement.
“However,
these
declines
occurred
when
mortgage
rates
were
rising
in
April
and
May.
With
rates
moderating
in
June,
purchase
mortgage
applications
indicate
that
rate-sensitive
buyers
are
hesitantly
responding.”

Kushi
added
that
more
buyers
may
be
enticed
back
into
the
market
if
mortgage
rates
continue
to
fall
and
inventory
levels
continue
to
rise.
But
she
also
feels
that
“a
robust
summer
recovery
is
unlikely
given
ongoing
affordability
constraints.”

Pending
home
sales
fell
year
over
year
in
all
four
major
regions,
with
the
South
posting
the
largest
yearly
decline
at
10.4%
to
an
index
reading
of
83.7.
Month
over
month,
pending
home
sales
were
down
in
the
Northeast
(-1.1%),
the
Midwest
(-0.4%)
and
the
South
(-5.5%.)
The
West
posted
a
1.4%
monthly
increase
to
a
reading
of
56.7,
which
is
down
2.1%
compared
to
a
year
ago.

Looking
ahead,
NAR
expects

mortgage
rates
to
remain
above
6%
in
2024
and
2025,
despite
any
interest
rate
cuts
the

Federal
Reserve
may
decide
to
implement.
Additionally,
the
trade
group
predicts
that
the
median
sales
price
will
jump
to
an
all-time
high
of
$405,300
in
2024,
compared
to
$389,900
in
2023.

With
this
in
mind,
NAR
is
forecasting
a
total
of
4.26
million

existing
homes
to
be
sold
in
2024,
up
from

4.09
million
in
2023,
and
for

housing
starts
to
fall
to
1.382
million,
down
from
1.413
million
in
2023.

“The
market
is
at
an
interesting
point
with
rising
inventory
and
lower
demand,”
NAR
chief
economist

Lawrence
Yun
said
in
a
statement.
“Supply
and
demand
movements
suggest
easing
home
price
appreciation
in
upcoming
months.
Inevitably,
more
inventory
in
a
job-creating
economy
will
lead
to
greater
home
buying,
especially
when
mortgage
rates
descend.

”The
first
half
of
the
year
did
not
meet
expectations
regarding
home
sales
but
exceeded
expectations
related
to
home
prices.
In
the
second
half
of
2024,
look
for
moderately
lower
mortgage
rates,
higher
home
sales
and
stabilizing
home
prices.”

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