According to the National Association of Realtors, pending contracts to purchase homes increased overall by .7% last month, breaking a six-month trend of declining sales, due to a large increase in the Northeast and more modest increases in the southern states. Pending sales in the Northeast accelerated 15.4%. Looking back to April, there was a 3.9% decline in the country, and overall, a 13.6% drop for 2022 so far.
Economists say in general, home contract signings have declined due to higher mortgage rates and higher prices, making houses unaffordable for many potential buyers, but that the market is fluctuating.
“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” said NAR Chief Economist Lawrence Yun. “Contract signings are down sizably from a year ago because of much higher mortgage rates.”
Monthly mortgage payments with a 10% down payment for a single family home in the median-price range have increased about $800/month, a significant increase and burden for many Americans .
According to realtor.com, supply of new homes for sale is up 21% from 2021. However, supply has not returned to pre-pandemic levels. Pricing is also still up – 17% more this year.
Experts attribute the increases in May to decreased mortgage rates. However, the trend across the country is fluctuating and new homes are still out of reach for many people.
Federal Reserve Chair Jerome Powell is hoping that raising interest rates will decrease demand and bring down the prices of new houses. He told Congress last week that the housing market is slowing down and that would affect housing prices.