Pending Home Sales Contract Year-Over-Year Despite Tumbling Mortgage Rates

With dismal new home sales (weakest since 2018) and a modest rebound in existing home sales (still down YoY for 15 straight months), this morning’s pending home sales data for May was expected to break the tie with a modest 1.0% MoM rise.

And on a month-over-month basis, pending home sales surprised to the upside, rising 1.1% in May indicating Americans may be responding to declining mortgage rates.

However, on a year-over-year basis, Pending Home Sales fell back into contraction (down 0.8% YoY)

Contract signings increased from the prior month in three of four regions, led by a 3.6% advance in the Midwest and a 3.5% gain in the Northeast. Pending sales were up 0.1% in the South and they fell 1.8% in the West.

Despite the total collapse in mortgage rates, this seems like quite a disappointing reaction.

“Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers,” NAR Chief Economist Lawrence Yun said in a statement.

While the Fed may cut interest rates this year, “there is no guarantee mortgage rates will fall from these already historically low points. Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.”

As a reminder, pending home sales are often looked to as a leading indicator of existing home purchases and a measure of the health of the housing market in the coming months.

via ZeroHedge News https://ift.tt/2X7L8RC Tyler Durden

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