The Pending Home Sales Index (PHSI), which measures housing contract activity and is released during the first week of each month, fell 4.7% in May compared to the expected decline of 2.8%.
Lawrence Yun, NAR (National Associations Of Realtors) chief economist, said some pullback after a sharp increase in the previous month was expected.
The overall decline in contract signings suggests we are not out of the woods by any means. The housing stimulus bill that is still being considered in the Senate is critical to assure a healthy recovery in the housing market, jobs and the economy.
Double-digit pending sales gains in May from a year ago were noted in Colorado Springs, CO, Sacramento, CA, and Spartanburg, S.C.
– The PHSI in the West fell 1.3% to 97.5 in May.
– In the Northeast, the index declined 2.9% to 77.0.
– The Midwest posted a decrease of 6.0% to 78.6.
– In the South, the index dropped 7.1% in May to 84.5.
NAR President Richard F. Gaylord, said:
The current market offers immediate benefits and long-term value for many buyers. Home buyers are getting a great deal right now, he said. Although inflationary expectations appear to be under control for the time being, sharper consumer price gains could lead to notably higher mortgage interest rates in 2009.
According to NAR, based on current indicators, the 30-year fixed-rate mortgage is forecast to rise gradually to 6.5% by the end of fiscal ’08, and then hold at that level for most of 2009.
NAR’s housing affordability index seems to be improving this year and is likely to rise 15 percentage points to 127.0 for all of 2008.