Pending home sales surged in May to set a new record for the highest month-over-month gain, the latest NAR report said.
The Pending Home Sales Index rose by 44.3 percent in May, marking a comeback of contract activity since declining 22 percent in April. Still, contract signing fell 5.1 percent year-over-year.
The recovery of contract signings in May shows the resilience of American consumers, NAR chief economist Lawrence Yun said. The home constructions still need to catch up, though, to offset the underproduction over the past decade.
The projected annual existing-home sales are thus revised, according to Yun, which is now expected to be dip less than 10 percent despite missing the spring buying season. The existing-homes sales are now expected to reach 4.93 million units in 2020, while new-home sales are expected to hit 690,000 units this year.
In May, each of the four regions rose on a month-over-month basis after being down in April, led by the West region with a growth of 56.2 percent. The Northeast follows with a 44.4 percent increase while South and Midwest also grew by 43.3 percent and 37.2 percent, respectively.
While the surge in pending home sales provides a glimmer of hope that the worst is going to be over for the residential housing market, the lack of housing inventory is still the buyers' "biggest hurdle," the Realtor.com report said.
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The volume of homes for sales across the nation dropped, making the home sellers the missing link to this year's otherwise strong housing market. The U.S. housing market inventory has plummeted 27.4 percent year-over-year in June or a reduction of about 363,000 homes for sale.
The metros that recorded the largest decline in new listings year-over-year include Cincinnati, Ohio-Ky.-Ind. (down 33.3%); Charlotte-Concord-Gastonia, N.C.-S.C. (down 32.2%); Louiseville/Jefferson County, Ky.-Ind. (down 31.1%); Riverside-San Bernardino-Ontario, Calif. (down 28.3%); and Kansas City, Mo.-Kan. (down 28.2%).
According to Realtor.com chief economist, Danielle Hale, the June data reflects that home buyers are back and serious about finding a home to buy. Despite an improvement in the number of new listings, inventory is still declining, indicating that these listing are being snatched up fast.
Homes continue to sell much slower compared to last year, though, due to the imposed restrictions, according to the data from Realtor.com. Nationally, the days on the market in June was 72 days, that is 15 days slower compared to the same period last year.
Meanwhile, the median home listing price rose 5.1 percent year-over-year in June to $342,000. Nationally, the per-square-foot median listing price grew by 7.7 percent year-over-year. Listing prices in the nation's largest metros also grew by an average of 5.7 percent year-over-year. Moreover, 46 of the 50 largest metros recorded year-over-year growth in median listing prices, up from 35 in May.
The largest metros that recorded the highest gains in median listing price year-over-year include Pittsburgh, PA (up 23.8 %); Los Angeles-Long Beach-Anaheim, CA (up 21.4 %); and Cincinnati OH-KY-IN (up 16.6 %).
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