The US economy has continued to show signs of a strong rebound as many states slowly reduce economic restrictions. There was the record increase in retail sales in May, a moderate bounce back in consumer confidence, and now a surge in pending home sales reported for the month of May.
The National Association of Realtors recently reported that pending home sales increased 44.3% in May. This data point tracks the number of home sales contracts signed in the month. The May increase is the highest ever reported since the inception of the index.
Despite the strong rebound in May the total number of pending home sales has not fully recovered from the sharp decline in March and April. Even after the strong rebound in May the total number of pending sales is still down 5.1% year-over-year.
The May pending home sales report mirrors the strong rebound in new home sales report for May. New home sales increased 16.6% leading to a rebound in homebuilder confidence and an increase in housing permits which is the leading economic indicator of the health of the housing market.
Unfortunately, the data for the housing market is unlikely to make a full recovery in 2020. The loss of the important Spring buying season cannot be replaced so data for 2020 will likely fall well short of its previous trend. Yet, some are optimistic that new trends may support certain areas of the market. For example, it is expected that home sales and new construction in the suburbs may see strong support as people rethink their living arrangements due to Coronavirus health risks. However, support for this trend is more anecdotal than factual at this point.