(Bloomberg) — An index of US pending existing-home sales unexpectedly fell in May to the lowest level on record as elevated mortgage rates and high prices discouraged prospective buyers
A gauge of contract signings from the National Association of Realtors decreased 2.1% to 70.8 last month, the lowest reading in data going back to 2001, the group said Thursday. The median estimate of economists surveyed by Bloomberg called for a 0.5% gain.
“The market is at an interesting point with rising inventory and lower demand,” NAR Chief Economist Lawrence Yun said in a statement. “Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”
Closings on previously owned homes have been stuck near an annualized 4 million for more than a year, partly because of the so-called lock-in effect, whereby sellers are unwilling to list their homes and part with their current low mortgage rates.
Potential homebuyers are turned off by high selling prices, which hit a record $419,300 in May, although the market is gradually seeing a pickup in listings. On a call with reporters last week, Yun noted optimistically that the supply of existing homes was up more than 18% from a year ago.
