Pending home sales unexpectedly break six-month losing streak in May

GON

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Didn't see this coming- The South did ok, Northeast performed good, the Midwest not so good. No data on the West provided.

Pending home sales unexpectedly broke a six-month streak of declines in May, climbing 0.7% to a reading of 99.9, according to the National Association of Realtors. Economists surveyed by Refinitiv were expecting a decline of 3.7%. An index of 100 is equal to the level of contract activity in 2001.

On a regional basis, contract signings jumped 15.4% month over month in the Northeast, increased 0.2% month over month in the South, fell 1.7% month over month in the Midwest and contracted 5% in the Midwest. The figures mark year-over-year declines of 11.9%, 13.8%, 8.8% and 19.8%, respectively.

Despite May's small gain in pending sales, NAR chief economist Lawrence Yun warns that the housing market is "clearly undergoing a transition." Contract signings fell 13.6% on a year-over-year basis in May, which Yun attributed to "much higher mortgage rates."

The average commitment rate for a 30-year, fixed-rate mortgage hit 5.81% last week, the highest level since November 2008.


 
1 month does not make a trend. Let's revisit the trends in 5 - 6 months.
May sales are still working on locked in lower rates.
I think the only two questions are housings shortages and moving because of safety.

If, and that is a big if, there is a housing shortage, sales and prices will likely continue to perform OK. At the end of the day, people need shelter. And the single family home housing shortage may have started well before MAR 2000. I noticed a lot more big money investment into large apartment homes, in areas that typically were heavy into single family homes.

Next is safety. One may be getting older, has their home paid off. Live in Chicago, Cleveland, etc. Concerned about safety. These older people will continue to move. I think these older people will buy in FL, TN, NC, SC etc, regardless of cost of the home. Of course, everyone has a pricing line they won't cross, but we have not seen that point for many buyers yet.
 
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There is no bubble in many parts of the country. It's simply more people moving in to a given state and not enough supply of existing housing.
 
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