Pending home sales skyrocket a record 44% in May as the housing recovery continues

• Pending home sales surged 44.3% in May, the largest month-over-month increase in the series history, the National Association of Realtors said Monday.
• The rebound in the index in May is further proof that the housing market is recovering swiftly following sweeping lockdowns to contain the coronavirus pandemic, fueled by pent-up demand and historic low mortgage rates.
• "The outlook has significantly improved," said Lawrence Yun, NAR's chief economist.

Pending home sales had a record rebound in May following two months of declines, showing that homebuyers are returning to the market as the US economy reopens.

The National Association of Realtors pending home sales index rose 44.3% to 99.6 in May, according to a Monday report. It's the highest month-over-month increase since the series began in 2001. The median economist estimate was for a 19.3% gain, according to Bloomberg data.

Pending home sales are a forward-looking indicator of housing based on contract signings. The rebound in the index in May is further proof that the housing market is recovering swiftly following sweeping lockdowns to contain the coronavirus pandemic, fueled by pent-up demand and historic low mortgage rates.

The rebound "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."

Still, the pending home sales index is below the pre-coronavirus pandemic high of 111.4, which it reached in February. And, Yun cautioned that the housing market needs more construction to "counter the persistent underproduction of homes over the past decade."

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Pending home sales advanced in each of the four regional indexes, according to the NAR. The trade group now expects existing home sales to reach 4.93 million units in 2020, up from a previous forecast of 4.77 million. Last year, existing home sales totaled more than 5.3 million.

"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.