American homebuyers have had a surprising rebound in home signings in May after months of a lacking inventory pushing prices up.
The National Association of Realtors’ index of pending home sales rose 8% to 114.7 in last month, the highest reading for May since 2005. An index of 100 is equal to the level of contract activity in 2001.
While there’s no shortage of people in the market to buy, many have been forced out by the lack of properties for sale, which along with rising material costs, have sent new and existing home prices to record highs.
Lawrence Yun, chief economist of the NAR, said he expects to see more listings in the second half of 2021 as homebuilding picks up and the federal mortgage forbearance program winds down. But even with lumber prices retreating slightly, home buyers shouldn’t expect prices to come back down too much.
“Home price growth will steadily moderate with increased supply, but a broad and prolonged decline in prices is unlikely,” Yun said.
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