U.S. Pending Home Sales Fell 3.7% in May
June 29 2016 - 10:40AM
Dow Jones News
WASHINGTON—The number of homes going under contract for sale
fell in May, a sign of slowing in the U.S. housing market.
The National Association of Realtors' pending home sales index,
which tracks contract signings for purchases of previously owned
homes, d ecreased a seasonally adjusted 3.7% in May from the prior
month, the trade group said Wednesday. Sales typically close within
a month or two of signing.
Economists surveyed by The Wall Street Journal had expected a
more modest decline of 2.0%.
The index was 110.8 in May compared with a downwardly revised
115.0 in April. The gauge was down 0.2% last month compared with
May 2015, its first annual decline since August 2014.
Lawrence Yun, the NAR's chief economist, pointed to tight
inventory and fast-rising prices as mounting problems for the
housing sector. "Realtors are acknowledging with increasing
frequency lately that buyers continue to be frustrated by the tense
competition and lack of affordable homes for sale in their market,"
he said.
News Corp, owner of The Wall Street Journal, also owns Move
Inc., which operates a website and mobile products for the National
Association of Realtors.
The U.S. housing sector has posted solid gains in recent years,
helping lift overall economic growth. The market's long
postrecession recovery has been supported by historically low
interest rates, which have moved lower so far this year. The
average rate on a 30-year fixed-rate mortgage in May was 3.60%,
down from 3.87% in January, according to Freddie Mac.
Sales of previously owned U.S. homes rose in May at its fastest
pace since February 2007, the Realtors group said last week. Sales
of newly built single-family homes, which are a small fraction of
the overall market, rose 6.4% in the first five months of the year
compared with the same period in 2015, according to Commerce
Department data.
Home-building activity has been rising, too. Housing starts in
the first five months of 2016 were up 10.2% compared with the same
period a year earlier, including a 14.5% increase in the
construction of single-family homes, according to the Commerce
Department.
Still, as Mr. Yun noted Wednesday, the supply of available homes
has remained tight, which is putting upward pressure on prices. At
the end of May, there was a 4.7-month supply of unsold existing
homes and a 5.3-month supply of newly built homes at the current
sales paces.
The Federal Reserve, in its June 15 policy statement, noted that
"the housing sector has continued to improve" since the start of
the year. Fed Chairwoman Janet Yellen told lawmakers last week that
"housing has continued to recover gradually, aided by income gains
and the very low level of mortgage rates."
Pending home sales declined in May across the country, led by a
5.3% drop in the Northeast and a 4.2% decline in the Midwest.
Pending sales were down 3.4% in the West and 3.1% in the South
compared with April. On an annual basis, sales in May were down in
the Midwest, a bit lower in the West, flat in the Northeast and up
slightly in the South.
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com
(END) Dow Jones Newswires
June 29, 2016 10:25 ET (14:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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