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May proved to be a comeback month for pending home sales, with positive contract activity after two previous months of declines due to COVID-19, according to the National Association of Realtors.

Pending home sales had a record-breaking 44.3% monthly increase in May, the highest month-over-month gain in the NAR Pending Home Sales Index (PHSI) since it began the series in January 2001. The index rose to 99.6 for May. An index of 100 is equal to the level of contract activity in 2001. Contract signings fell 5.1% year over year.

“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

Yun noted that more listings are appearing as the economy reopens, but more construction is needed to make up for the underproduction of homes over the past decade.

“The outlook has significantly improved, as new-home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10%—even after missing the spring buying season due to the pandemic lockdown,” Yun said.

NAR is expecting existing-home sales to reach 4.93 million units in 2020 and new-home sales to hit 690,000. “All figures light up in 2021 with positive GDP, employment, housing starts, and home sales,” Yun said, adding that sales are predicted to rise to 5.35 million for existing homes and 800,000 for new homes next year.

According to the NAR, every major region saw month-over-month increases, while the South also recorded year-over-year increases in pending transactions. Among the largest metros, according to data from realtor.com, active listings were up by more than 10% in Colorado Springs, Colo.; Denver; Honolulu; San Francisco; and San Jose, Calif., in May compared with April.

The Northeast PHSI increased 44.4% to 61.5 in May, although down 33.2% from May 2019. The index rose 37.2% to 98.8 in the Midwest, down 1.4% from a year ago. In the Southeast, pending home sales increased 43% to an index of 125.5, up 1.9% from a year ago. The index in the West increased 56.2% to 89.2, declining 2.5% from May 2019.