Pending Home Sales Index Down Again in May

Mark Lieberman

Managing Director and Senior Economist


  • National Association of Realtors’ May Pending Home Sales Index (PHSI) FELL 0.5 percent from April to 105.9;
  • Year-year the index was DOWN 2.5 percentage points;


  • The May decrease was the third in five months this year;
  • Index is down year-year for the five straight months;
  • PHSI is essentially tracking the Census Bureau’s new homes report (also based on contracts for sale) which was flat in January and rose in February and March

Data Source: National Association of Realtors (NAR)

Image result for pending home sales

In another blow to the home sale market, the NAR’s pending home sales index dropped again in May, the third decline this year, as home sales face new challenges in fears of a recession and higher interest rates.

Since the beginning of the year the average rate for a 30-year fixed rate mortgage, according to Freddie Mac, has risen for 3.95 percent to 4.57 percent, raring the average monthly payment (excluding insurance and taxes) on a $300,000 mortgage from $1,425 to $1,534.

Realtors already face significant challenges as, according to Harvard’s Joint Center for Housing Studies which said in its annual State of the Nation’s Housing report stagnant wage growth is stifling home ownership in the U.S.

Although the homeownership rate rose last year, the report noted the year-year increase was the first in 13 years. Homeownership, the report said, is down 8.2 percent among 35-44 years-olds and down 6.3 percent for 25-34-year-olds since 1987, the first year of the annual report.

The 2018 study said the profile of homeowners has changed since the initial study and is older.

“The overall aging of the US population has important implications for housing markets, with 65–74-year olds now the fastest-growing age group,” the report said. “Since older adults generally live in established households and strongly prefer to remain in their homes as they age, they have not historically added significantly to new housing demand. But given the size of the baby-boom generation, households headed by persons age 65 and over will continue to grow at an unprecedented pace in the next decade, increasing the presence of older households in both the homeowner and rental markets.”

In addition to demographics, would-be younger home-buyers carry a significant student loan debt burden which adds another hurdle to the mortgage process.

The NAR’s pending home sales report had been tracing closely the Census Bureau’s similar report on (pending) new home sales, but has begun to diverge. The government report on new home sales (contracts for sale) showed a sharp increase in May.

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