Pending home sales soared 44% in May after falling 22% in April, according to new data released by the National Association of Realtors—it’s a strong indicator that the worst of the coronavirus recession may be over for the housing market.
Pending home sales are a measure of signed contracts for home sales that have not yet been completed; they’re used as an indicator of how many buyers initiated new sales during a given month.
May’s gains are the highest month-to-month since the National Association of Realtors started tracking the data in January 2001.
While the supply of homes remains relatively low, listings were up more than 10% last month in Honolulu, San Francisco, San Jose, Denver, and Colorado Springs.
The rate on a 30-year fixed-rate mortgage has fallen from a 52-week high of 4.15% to 2.96%, according to Mortgage News Daily. Low mortgage rates typically help encourage home sales. They’ve also spurred a boom in refinancing applications as homeowners scramble to take advantage of favorable borrowing conditions.
“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” Lawrence Yun, NAR’s chief economist, said in a statement. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
Pending Home Sales Notch Record-Setting 44.3% Monthly Increase in May (National Association of Realtors)