Pending home sales blew past expectations in May as buyers come to accept the “new normal” of mortgage rates above 6%, the National Association of REALTORS® said in its Pending Home Sales report.
The pace of contract signings jumped 3.8% month over month — almost four times the 1% increase analysts were expecting. Year over year, pending sales were up 4.8%. The pace of pending sales was notable in the Miami metro, where it jumped 11.4% month over month, ranking it No. 4 in the nation for monthly increase.
“A late spring buyer rush — even with mortgage rates not budging — is an indication of pent-up housing demand and consumers’ acceptance of above-6% mortgage rates as the new normal,” said NAR Chief Economist Lawrence Yun. “Going forward, falling oil prices will help lower mortgage rates, but declines will be modest given sizable borrowing by the federal government and strong AI investment spending by tech companies.”
Regionally, pending sales were up month over month and year over year across the board, with the biggest gains occurring in the Northeast and Midwest.
“What makes the recent improvement particularly noteworthy is that it has occurred despite mortgage rates moving higher through much of the spring,” First American Deputy Chief Economist Odeta Kushi said. “Under normal circumstances, higher financing costs would be expected to dampen buyer demand. Instead, many households appear willing to move forward with purchases as inventory improves and the reality of higher-for-longer mortgage rates becomes more widely accepted.”
On the local level, several metros had a particularly robust month of contract signings:
- Kansas City, Missouri (+20.1%)
- San Antonio-New Braunfels (+15.7%)
- Minneapolis-St. Paul-Bloomington (+13.9%)
- Miami-Fort Lauderdale-West Palm Beach (+11.4%)
- Louisville/Jefferson County, Kentucky (+11.2%)
- Cincinnati (+10.1%)
- Nashville-Davidson-Murfreesboro-Franklin, Tennessee (+9.4%)
- Milwaukee-Waukesha (+8.7%)
- Virginia Beach-Chesapeake-Norfolk, Virginia (+8.2%)
- Richmond, Virginia (+8.2%)