The Pending Home Sales Index decreased for the third month in a row, and annually for the second year in a row. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), decreased to 108.5 in May, down 0.8% from a downwardly revised 109.4 in April, and down 1.7% from the level a year ago.
The PHSI remained flat in the Midwest, and decreased in the Northeast, South and West by 0.8%, 1.2% and 1.3% respectively. Year-over-year, the PHSI increased 3.1% in the Northeast, but fell 1.4% in the South, 2.8% in the Midwest and 4.5% in the West.
May existing sales increased 1.1%, despite two monthly declines in the PHSI. However, NAR reported a 7.2% year-over-year decline in sales of homes priced under $100,000 and only a 2.0% year-over-year sales increase in homes priced between $100,000 and $250,000. Meanwhile, sales jumped 26.0% for homes priced between $750,000 and one million dollars, while sales for homes at a million dollars and up increased 29.1%. The low inventory of homes for sale continues to dampen sales in the first two categories, but the sharp dichotomy suggests a more troubling picture regarding affordability. However, sales of new homes gained 2.9% in May, and as the economy adds jobs, the increased demand among first-time buyers will support new and existing sales in 2017.