Following a dismal early Spring when most of the country faced lockdown, pending home sales saw a solid 44% spike in May. But with new COVID hotspots emerging in states from east to west, is it too soon to call it a rebound?
According to the National Association of Realtors, pending home sales spiked 44.3% in May over April, representing the largest one-month jump in the history of the survey, dating back to 2001.
“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist, according to CNBC. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
With initial industry expectations set at a 15% month-over-month gain, the 44% leap was welcome good news. Sales, however, were still 5% lower compared with May 2019.
The industry’s pivot to virtual showings is likely to have contributed to the increase, along with rock-bottom mortgage rates. According to Mortgage News Daily, the average rate on the 30-year fixed mortgage started May around 3.20%, and by early June was falling below 3%.
How will emerging new COVID hotspots effect summer sales? CNBC points out that regionally, pending home sales in the Northeast rose 44.4% for the month but were down 33.2% from a year ago. In the Midwest, sales rose 37.2% monthly and were down 1.4% annually. Pending home sales in the South increased 43.3% month-to-month and were up 1.9% from May 2019. In the West sales jumped 56.2% monthly and were 2.5% lower annually.