Pending home sales rose more than expected in May, as three of the four regions showed gains, led higher by lower-than-usual lending rates, the National Association of Realtors said Thursday.
The pending home sales index, a forward-looking measure based on contract signings, rose 1.1% to 105.4 in May from 104.3 the month before, and ahead of Econoday’s consensus for 0.6% growth. On an annual basis, the signings fell 0.7%, for the 17th straight month of declines on a yearly basis, the association said.
“Rates of 4%, and, in some cases even lower create extremely attractive conditions for consumers,” said Lawrence Yun, NAR’s chief economist. “Buyers, for good reason, are anxious to purchase and lock in those rates.”
Freddie Mac on Thursday said interest rates on 30-year fixed-rate mortgages fell to 3.73 in the week ended June 27, down from 3.84% the week before and below 4.55% a year ago.
The index in the northeast rose 3.5% to 92 in May and was 3.6% higher in the Midwest to 100.3. The south firmed 0.1% to 124.1 last month. The west fell 1.8% to 91.8.
Yun said he expects more home buying in the coming months as consumer confidence as risen.
“The Federal Reserve may cut interest rates on more time this year, but there is no guarantee mortgage rates will fall from these already historically low points,” he said. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.”
Yun said more inventory is needed. “Home builders have not ramped up construction to the extent that is needed,” he said. “Homes are selling swiftly, and more construction will help keep home prices manageable and thereby allow more middle-class families to attain ownership opportunities.”
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