Back to Markets
Forex▲ Bullish
US Pending Home Sales Jump 3.8%, Beat Forecasts
Pending home sales rose 3.8% in May, far exceeding the 0.8% estimate, with all four U.S. regions posting gains. The data points to a housing market gradually regaining momentum despite mortgage rates above 6%.
Continue with
Pending home sales in the U.S. rose 3.8% in May from April, the National Association of Realtors said. Economists had forecast a 0.8% gain. The increase was broad-based, with all four major regions posting month-over-month advances. The pending sales index also rose 4.6% from a year ago.
Pending home sales measure signed contracts for existing homes. They are considered a leading indicator because they track deals that typically close within one to two months. Existing-home sales, which rose 3.2% in May, reflect closings that occurred during the month. The National Association of Realtors said the existing-home sales gain was one of the strongest monthly increases in three years.
Housing starts, released a day earlier by the Commerce Department, came in at a 1.177 million annualized rate, well below the 1.430 million estimate. Pending sales rose while starts fell. The gap between demand and supply widened.
Mortgage rates remain above 6%. The May data shows buyers in the Midwest and Northeast are still active. Those two regions led the gains. The National Association of Realtors said the data points to a housing market that is gradually regaining momentum. The South and West also saw gains, at a slower pace.
The housing data adds to a run of economic reports that have surprised to the upside. Last month, retail sales rose 0.9%, beating expectations and pushing back bets on a Federal Reserve rate cut. The housing market's resilience could keep inflation pressures elevated in the housing sector, which accounts for a significant portion of CPI. The Fed has said it needs to see sustained progress on inflation before cutting rates.
The central bank will consider the housing data when it meets next. Shelter costs have been a persistent driver of inflation, and a strong housing market could slow the disinflation process. The combination of rising demand and constrained supply could push home prices higher, which would feed into shelter inflation. Mortgage rates have been volatile this year, with the 30-year fixed rate hovering near 7% in recent weeks. The May pending sales gain came despite those elevated rates.
The June existing-home sales report is due next month.