14 West Hawaii Real Estate | July 6, 2018
Pending home sales inch back 0.5 percent in May
Pending home sales decreased
modestly in May and have
now fallen on an annualized
basis for the fifth straight
month, according to the National
Association of Realtors®. A larger decline
in contract activity in the South
offset gains in the Northeast, Midwest
and West.
The Pending Home Sales Index,
a forward-looking indicator based on
contract signings, decreased 0.5 percent
to 105.9 in May from 106.4 in April.
Lawrence Yun, NAR chief economist,
says this year’s spring
buying season will go down
as one of unmet expectations.
“Pending home sales
underperformed once again in
May, declining for the second
straight month and coming
in at the second lowest level
over the past year,” Yun said.
“Realtors in most of the country
continue to describe their
markets as highly competitive
and fast moving, but without
enough new and existing
inventory for sale, activity has
essentially stalled.”
The lackluster spring, according
to Yun, has primarily
been a supply issue, and not one
of weakening demand. If the recent
slowdown in activity were because
buyer interest is waning, price growth
would start slowing, inventory would
begin rising and homes would stay on
the market longer. Instead, the underlying
closing data in May showed that
home price gains are still outpacing
income growth, inventory declined on
an annual basis for the 36th consecutive
month, and listings typically went
under contract in just over three weeks.
“With the cost of buying a home
getting more expensive, it’s clear the
summer months will be a true test for
the housing market. One encouraging
sign has been the increase in new
home construction to a 10-year high,”
added Yun. “Several would-be buyers
this spring were kept out of the market
because of supply and affordability
constraints. The healthy economy
and job market should keep
many of them actively looking
to buy, and any rise in inventory
would certainly help them find
a home.”
Yun now forecasts for
existing-home sales in 2018
to decrease 0.4 percent to
5.49 million – down from 5.51
million in 2017. The national
median existing-home price is
expected to increase around
5.0 percent. In 2017, existing
sales increased 1.1 percent and
prices rose 5.7 percent.
The PHSI in the Northeast
increased 2.0 percent to 92.4
in May, but is still 4.8 percent
below a year ago. In the Midwest
the index rose 2.9 percent
to 101.4 in May, but is still 2.5
percent lower than May 2017.
Pending home sales in the
South declined 3.5 percent
to an index of 122.9 in May
unchanged from a year ago.
The index in the West inched
forward 0.6 percent in May to
94.7, but is 4.1 percent below a
year ago.
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