WASHINGTON — Contracts signed to purchase previously owned homes across the country surged beyond expectations in May, though the housing market continues to face headwinds from high mortgage rates and a limited number of available homes.
The National Association of Realtors reported Wednesday that its pending home sales index climbed 3.8% last month, reaching 76.8 — the strongest reading since November of last year. Economists surveyed by Reuters had only anticipated a 0.8% increase. These contracts typically turn into completed sales within one to two months.
Every region of the country posted gains. The Northeast led with an 8.7% jump, followed by the Midwest at 8.1%. Compared to the same time last year, contracts were up 4.8% nationally.
Mortgage rates have been pushed higher as the U.S.-backed war with Iran sent oil prices upward, fueling inflation and driving up Treasury yields. According to data from Freddie Mac, the rate on the widely used 30-year fixed mortgage has climbed more than 50 basis points since the conflict began in late February.
On Sunday, Washington and Tehran announced they had reached an agreement to end the war and reopen the Strait of Hormuz.
Lawrence Yun, the NAR’s chief economist, pointed to a notable shift in the Northeast. “The inventory-constrained Northeast region, which has seen faster home price growth but slower home sales for several months, is now showing more buyer contract signings,” he said. “More supply is needed to help moderate home price growth.”
