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Economy in Brief

U.S. Pending Home Sales Improve in May
by Tom Moeller  June 27, 2022

• Increase follows six straight months of decline.

• Only one region shows significant gain.

Home buying weakness eased last month. The Pending Home Sales Index from the National Association of Realtors improved 0.7% during May after falling 4.0% in April, revised from -3.9%. It was the first increase following six consecutive monthly declines. Pending home sales have fallen 18.4% since the recent peak in October of 2021.

A 15.4% sales gain (-11.9% y/y) in the Northeast recovered a 15.9% April decline. In the South, sales did rise as well but just by 0.2% (-13.8% y/y), the first increase in seven months. In the Midwest, sales declined 1.7% (-8.8% y/y) after rising 6.1% in April. Sales weakened 5.0% in the West last month (-19.8% y/y) but they have fallen 21.1% since October.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's PREALTOR database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the SURVEYW database.

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