Pending Home Sales Fall 2.1% in May to New All-Time Low

The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. The index fell 2.1% in May to 70.8, its lowest level in the history of the series. Pending home sales are down 6.6% from one year ago.

“The market is at an interesting point with rising inventory and lower demand,” said NAR Chief Economist Lawrence Yun. “Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”

“The first half of the year did not meet expectations regarding home sales but exceeded expectations related to home prices,” explained Yun. “In the second half of 2024, look for moderately lower mortgage rates, higher home sales and stabilizing home prices.”

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Pending Home Sales Background

The pending home sales index (PHSI) was created by the National Association of Relators to track home sales where the contract is signed, but the transaction has not yet closed. An index of 100 is equal to the level of contract activity in 2001. The PHSI is a leading economic indicator of future existing home sales.

The chart below gives us a snapshot of the index since 2001, the first year data was analyzed. Pending Home Sales Index

Over this time frame, the US population has grown by 18.6%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.

Pending Home Sales Growth

The above chart shows the percent off turn-of-the-century values. The index for the most recent month is currently 45% below its all-time high from August 2020. The population-adjusted index is 51% off its high from April 2005.