Contract signings also rose 13.1 percent year over year, according to the data. The Pending Home Sales Index (PHSI), a forward-looking indicator of future sales based on contract signings, is currently at 114.7.
Such significant growth hasn’t been observed in the month of May since 2005, a fact likely spurred by low mortgage rates and an inventory dearth that has resulted available property being snapped up at record rates.
“May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise,” NAR Chief Economist Lawrence Yun said in a statement. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3 percent, and from an uptick in listings.”
All four regions across the U.S. saw annual and monthly increases in contract signings. The Northeast experienced the most dramatic growth at 54.6 percent year over year while the South grew by only 6.1 percent. The West and the Midwest grew by 12.5 percent and 7.8 percent, respectively.
“We believe existing home sales are going to see much harder year-over-year comparisons for the remainder of the year, as the base for comparison moves away from the slump generated in the early months of the pandemic and into the surge in home sales that followed,” Keller Williams Chief Economist Ruben Gonzalez said in a statement.