Americans continued to snap up existing-homes in May, pushing the National Association of Realtors’ pending home sales index up 0.1% compared to the previous month to a reading of 90.7.
On an annual basis, that represents a 6.7% gain for the indicator, which has now improved for four months in a row. According to the NAR, which released the data Wednesday, “the last time there were four consecutive monthly gains was in October 2004.”
The most active region of the country proved to be the Northeast, where the pending home sales index jumped 3.1% compared to April. The West also showed gains, increasing 2.2% on a monthly basis. Both the South and Midwest reported slight declines (down 1.7% and down 1.3%, respectively).
But the introduction of new appraisal rules is turning out to be a wild card in many of these would-be deals. “Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” said Lawrence Yun, NAR’s chief economist. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”
New-home builders are also wrestling with the new appraisal guidelines. (To comment on the current appraisal situation, please visit BUILDER’s LinkedIn Group’s discussions.)
Alison Rice is senior editor, online, at BUILDER magazine.