Contracts to buy previously-owned homes in the US rose dramatically in May, posting the biggest rebound on record as the American housing market began to recover from the Covid-19 hit.
The National Association of Realtors (NAR) said that its Pending Home Sales Index, based on contracts signed last month, surged 44.3 per cent in May — the largest increase since the series started in 2001 — to 99.6.
Contracts still remained below their level of 111.4 in February before non-essential businesses were shuttered in a bid to slow the spread of the Covid-19, almost grounding the world’s largest economy to a halt.
“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 NAR chief economist Lawrence Yun.
“This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery,” he added.
Economists polled by Reuters had forecast pending home contracts, which become sales after a month or two, rebounding 18.9 per cent in May. Pending home sales fell 5.1 per cent year-on-year.
Home re-sales tumbled to a more than 9.5-year low in May. Economists believe the housing market could emerge relatively quickly from the recession, which started in February, thanks to historic low interest rates.
Applications for home loans are near an 11-year high and building permits rebounded sharply in May.
Data released last week showed that sales of new single-family homes in the US rose more than expected in May, fuelling hopes that the country’s housing market could be starting to recover from the pandemic.
However record unemployment, with 30.6 million collecting unemployment benefits in the first week of June, remains a significant challenge for the US housing market.