Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Pending home sales 'fell off a cliff'

By Les Christie, staff writer


NEW YORK (CNNMoney.com) -- The experts expected home sales to drop once the homebuyer tax credit lapsed at the end of April, but the depth of the decrease was shocking.

According to the National Association of Realtors (NAR), pending home sales fell a whopping 30% in May. Their index, which measures signed sales contracts but not closed sales, plunged to 77.6 from 110.9 in April. It's even off 15.9% from a year ago when the nation was barely emerging from the recession.

"The pending home sales report is a disaster," said Mike Larson, a real estate analyst for Weiss Research. "Sales fell off a cliff after the tax credit expired. It's the biggest monthly decline ever and the index is at its lowest level since NAR began tracking it in 2001."

Lawrence Yun, NAR's chief economist downplayed the damage a bit. According to him, customers rushed into deals to claim the credit, borrowing from May sales. Once the economic recovery comes into full swing, housing markets will heat up.

"If jobs come back as expected, the pace of home sales should pick up later this year," said Yun, "and reach a sustainable level of activity given very favorable affordability conditions."

Those conditions include much lower home prices and extremely favorable mortgage interest rates. The question is when -- or if -- the job market will ever bounce back.

"We're not creating jobs," said Larson. "The housing problems now are being driven by broad economic problems." To top of page


Overnight Avg Rate Latest Change Last Week
30 yr fixed4.04%4.00%
15 yr fixed3.19%3.15%
5/1 ARM3.31%3.28%
30 yr refi4.08%4.04%
15 yr refi3.21%3.16%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 19,885.73 -5.27 -0.03%
Nasdaq 5,574.12 26.63 0.48%
S&P 500 2,274.64 4.20 0.18%
Treasuries 2.38 0.02 0.80%
Data as of Jan 14
Company Price Change % Change
Bank of America Corp... 23.01 0.09 0.39%
FMC Technologies Inc... 35.85 -0.15 -0.42%
Wells Fargo & Co 55.31 0.81 1.49%
Freeport-McMoRan Inc... 15.19 -0.08 -0.52%
Ford Motor Co 12.63 0.04 0.32%
Data as of Jan 13

Sections

Shares of Corona distributor Constellation Brands have dropped 10% since the election due to concerns about how Trump's tax and immigration policies will impact the beer company. More

Congressional Republicans will have to spend billions on Obamacare subsidies, even as they move to repeal the law. More

Microsoft CEO Satya Nadella is confident about his company's role as a job creator, even as Trump puts other CEOs on edge. More

Rhode Island Governor Gina Raimondo wants to make two years of tuition free for residents enrolled at public colleges. More