Pending home sales in the U.S. continued to decline unexpectedly in May, according to a report released by the National Association of Realtors (NAR) on Thursday.
The NAR reported that its pending home sales index fell by 2.1 percent to 70.8 in May, following a steep 7.7 percent drop to 72.3 in April. Economists had predicted a 2.5 percent increase in pending home sales.
A pending home sale refers to a transaction in which a contract has been signed but not yet finalized, typically closing within four to six weeks.
"The market is at an interesting juncture with rising inventory and decreasing demand," commented Lawrence Yun, NAR Chief Economist. "The trends in supply and demand indicate a potential slowdown in home price appreciation in the coming months."
Yun also noted, "An increase in inventory alongside a job-creating economy will inevitably lead to more home buying, especially if mortgage rates decline."
The unexpected drop in pending home sales was significantly influenced by a sharp decline in the South, where sales fell by 5.5 percent. The Midwest experienced a 0.4 percent decrease, while the Northeast and West saw increases of 1.1 percent and 1.4 percent, respectively.
Additionally, a separate report from the Commerce Department on Wednesday revealed a significant reduction in new home sales in the U.S. for May.
The Commerce Department stated that new home sales plummeted by 11.3 percent to an annual rate of 619,000 in May, after a 2.0 percent rise to a revised rate of 698,000 in April. Economists had anticipated new home sales to increase to an annual rate of 640,000 from the originally reported 634,000 in the previous month.
