Monday, July 6, 2020 / by Scott Shine
After two previous months of declines, pending home sales are showing a market rebound, with every major region recording a month-over-month increase.
According to NAR, the Pending Home Sales Index increased to 99.6 in May—the highest monthly growth since NAR began the series in January 2001. Since the same time last year, pending home sales have fallen 5.1 percent.
In the South—the region including Texas—pending sales increased 43.3 percent over the month and 1.9 percent over the year.
Real Estate Center Research Data Scientist Gerald Klassen said Texas also saw a surge in pending home sales in May and June.
"It looks like prospective buyers were able to continue virtual shopping during the lockdown and find homes they wanted to purchase," said Klassen. "When the lockdown ended, they were ready to physically visit and sign contracts. It appears that the pent-up demand is exhausting itself as the flow of pending sales falls back to last year's levels.
"It will be interesting to see in the next few weeks if the weekly flow falls below last year. We are late in the selling season so the recent burst of pending listings is likely not sustainable."
NAR expects existing-home sales to reach 4.93 million units in 2020, with new-home sales potentially hitting 690,000. "Tighter credit for low-priced and high-priced homes is a headwind that we didn’t have last year," said Klassen. "Lower mortgage rates for GSE-eligible mortgages is a tailwind. Soon we will see which factors have a greater influence on the market."
In 2021, NAR expects sales to rise to 5.35 million units for existing homes and 800,000 for new homes.