The past year has been a whirlwind for the housing market in a good way. There has been a boom in sales as seen in pending home sales up the highest level of sales for May since 2005. According to the National Association of Realtors, May 2021 was up 8% compared to April 2021 and 13% from the sales in May 2020.
“May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise,” said Lawrence Yun, NAR’s chief economist. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings.”
All four regions saw an increase in pending home sales in May. The Northeast had a 15.5% increase, the Midwest climbed 6.7%, the South rose 4.9% and the West increased to 10.9% month over month.
Although the market is still hot, weekly mortgage demand did take a 7% downturn in May 2021.
“While these hurdles have contributed to pricing out some would-be buyers, the record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases,” Yun said.
The could have stemmed from the home price increases. The S&P Case-Shiller National Home Price Index rose 14% year over year in April 2021. This increase was the largest gain in its 30-year history. The median home price has also increased which has made it harder for first-time homebuyers.