The Meyers Research New Home Pending Sales Index rose to 101.6 on a seasonally adjusted basis in May 2020, up from 87.1 in April. Pending home sales are down 5.2% year over year but have rebounded by 16.7% month over month.
Out of 20 select major markets, 19 posted a month-over-month increase in pending new home sales. Seattle is the only market where pending home sales fell month over month (-13.4%), as well as the only market where pending sales fell both month over month and year over year (-25.1%). Ali Wolf, chief economist at Meyers Research, attributes this drop to a higher-than-average unemployment rate, lower community counts compared with other markets, and tough comps in May 2019 and April 2020.
Sales rose YOY in nine out of the 20 markets, led by Houston (+12.4% YOY), Jacksonville, Fla. (+12.0% YOY), and Tampa, Fla., (+11.7% YOY). Despite headwinds from COVID-19 and oil price shocks, builders have found success in first-time buyer segments over the past 24 months.
Wolf owes the housing market’s ongoing rebound to low mortgage rates, pent-up demand, greater flexibility of location for work-from-home employees, and a higher savings rate. “Home sales rebounded quickly after a six-week pause in March and early-April,” Wolf says. “Buyers proved in May that unbelievably low rates were a stronger force than the battered consumer confidence. Our data combined with conversations with builders show that June is turning out to be another blockbuster month. We expect the next few months to be great for the new-home market.”