Pending home sales had a historic rebound in May, meaning the worst may have already come for the property market

The counts: After two consecutive months of decline, the pending home sales index soared 44.3% in May compared to April, the National Association of Realtors said on Monday.

The monthly increase was the largest since the National Association of Real Estate Agents began the index in January 2001. “This has been a dramatic recovery for contract firms, and demonstrates the resilience of American consumers and their undying desire. Homeownership, “Lawrence Yun, chief economist for the National Association of Realtors, said in the report. “This recovery also talks about how the housing sector could lead the way to a broader economic recovery.”

The index measures real estate transactions for previously owned houses where a contract was signed but the sale was not yet closed, compared to contract signing activity in 2001.

Compared to a year ago, contract signatures still declined 5.1%, a sign of how steep the declines were in March and April with the record monthly increase in May.

What happened: Each region experienced a monthly increase in pending home sales, led by the West (up to 56%) and the Northeast (up to 44%). Only the South experienced a year-on-year increase in contract signing.

With the outlook for home sales improved, Yun said the National Association of Realtors now expects existing home sales to reach 4.93 million this year and new home sales to hit 690,000.

The panorama: The rebound in pending home sales means there will likely be no repeat of May’s significant drop in existing home sales in the coming months.

Along with last week’s new home sales report for May, which also measures contract signatures, it appears that home buyers are eager to reenter the property market. As such, the generally busy spring home buying seasons seem to have been delayed for most buyers rather than being directly foregone.

Research has shown that job losses related to the coronavirus pandemic have occurred largely for lower-wage workers who are less likely to be home buyers, so people looking to buy a home have resisted the recession up to this point. And record low mortgage rates are proving to be a great incentive.

Still, buyers will have trouble finding houses to buy. Sellers are still reluctant to list their homes due to concerns about the coronavirus and the economy. Before the pandemic began, the US already saw a very small supply of homes for sale. For buyers in today’s market, that means they can expect more competition and higher prices for available properties.

What they are saying “The sale of new homes took a similar turn upward last week, but today’s pending data is a more important indicator of market activity, as they cover existing homes that accounted for approximately 80 to 90 percent of sales in recent years. This move confirms that May closings could represent a low point for home sales, with much better June and July figures, “said Danielle Hale, chief economist at

Market reaction: The Dow Jones Industrial Average DJIA,
+ 2.03%
and the S&P 500 SPX,
+ 1.32%
both rose slightly on Monday morning, following housing data, despite a continued rise in COVID-19 cases.