The housing market showed signs of strength in May as home contract signings increased, despite concerns about high mortgage rates and inflation. According to the National Association of Realtors, the Pending Home Sales Index rose 4.8% year over year in May, with a 3.8% month-over-month increase.
Sales were up across all regions of the country, with the Midwest leading the way with a 9.3% jump. Homebuyers are increasingly turning to the Midwest for its affordability compared to other regions like the Northeast.
NAR chief economist Lawrence Yun noted that the late spring buyer rush indicates pent-up demand and consumers’ acceptance of mortgage rates above 6% as the new normal. Mortgage rates remained steady around 6.4% to 6.5% in May, despite inflationary pressures. Housing economists initially feared that inflation and geopolitical tensions would dampen buyer enthusiasm during the busy spring season, but so far, sales are outpacing last year’s numbers.
Pending home sales are a leading indicator of future sales activity, as homes typically go under contract a month or two before being sold. This positive trend in contract signings bodes well for the overall housing market outlook.
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