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NAR says May\u2019s increase in pending home sales ended a six-month skid of declines, but despite the gain, \u201cthe housing market is clearly undergoing a transition.\u201d<\/span><\/span><\/p>\n<\/div>\n WASHINGTON \u2013 Pending home sales crept higher in May, ending a six-month streak of declines, according to the National Association of Realtors\u00ae (NAR). Regionally, month-over-month results were mixed \u2013 the Northeast and South experienced increases, while the Midwest and West posted decreases. However, year-over-year contract activity slid in all four regions.<\/span><\/span><\/p>\n The Pending Home Sales Index (PHSI) \u2013 a forward-looking indicator of home sales based on contract signings \u2013 inched up 0.7% to 99.9 in May. Year-over-year, transactions dropped 13.6%. An index of 100 equals the level of contract activity in 2001.<\/span><\/span><\/p>\n \u201cDespite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,\u201d says NAR Chief Economist Lawrence Yun. \u201cContract signings are down sizably from a year ago because of much higher mortgage rates.\u201d<\/span><\/span><\/p>\n According to NAR, a monthly mortgage payment has increased about $800 \u2013 based on a median single-family home price with a 10% down-payment \u2013 since January because mortgage rates have climbed 2.5 percentage points.<\/span><\/span><\/p>\n \u201cTrying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy,\u201d Yun says. \u201cThe better way to balance the market is through increased supply, which also helps the broader economy.\u201d<\/span><\/span><\/p>\n While the housing market remains unbalanced nationwide with demand far outpacing supply, Yun says variations in home prices and affordability contributed to regional differences in May pending sales.<\/span><\/span><\/p>\n \u201cThe largest decline in contract activity was observed in the West region, where homes are the most expensive,\u201d Yun says. \u201cThis further indicates the growing need to increase supply to tame home price growth and improve the chances of ownership for potential homebuyers.\u201d<\/span><\/span><\/p>\n May pending home sales regional breakdown<\/strong>: The Northeast PHSI jumped 15.4% compared to last month at 86.7, though its down 11.9% from May 2021. The Midwest index retreated 1.7% to 98.6 in May, a year-to-year decline of 8.8%.<\/span><\/span><\/p>\n\n