The West Sees an Increase in Pending Home Sales in May

July 1, 2024—In a positive turn for the real estate market, the Western region of the United States experienced an increase in pending home sales for May, according to the latest data from the National Association of REALTORS® (NAR). The region’s Pending Home Sales Index (PHSI), which serves as a forward-looking indicator based on contract signings, rose by 1.4% to 56.7.

This increase comes as a welcome development amid a backdrop of mixed performance across other U.S. regions. While the Northeast also saw gains, the Midwest and South reported declines in pending transactions. Despite the monthly improvement, the West’s PHSI still reflects a 2.1% decrease compared to the same period last year, highlighting ongoing challenges in the housing market.

Factors Contributing to the Increase

Several factors have contributed to the uptick in pending home sales in the West:

  1. Rising Inventory: An increase in available homes has provided buyers with more options, leading to a boost in contract signings.
  2. Job Market Strength: The robust job market in many Western states continues to support home-buying activity as more individuals and families are financially positioned to purchase homes.
  3. Desirable Living Conditions: The West remains an attractive region for its diverse landscapes, favorable climate, and vibrant cultural scenes, drawing both new residents and investors.

Expert Insights

NAR Chief Economist Lawrence Yun commented on the significance of this trend: “The market is at an interesting juncture with rising inventory and lower demand. However, the increase in pending sales in the West suggests that there are still pockets of strong demand and opportunities for growth in the region. This could signal a more balanced market moving forward, particularly if mortgage rates begin to ease.”

Outlook for the Second Half of 2024

Looking ahead, experts predict that the housing market in the West could continue to see steady activity. Yun noted, “In the second half of 2024, we anticipate moderately lower mortgage rates, which could further stimulate home-buying activity. Coupled with a healthy job market, this bodes well for sustained growth in the region.”

Regional Breakdown

  • Northeast: The PHSI in the Northeast rose by 1.1% from the previous month to 63.6, though it remains 2.3% below May 2023 levels.
  • Midwest: The Midwest saw a slight decline of 0.4% in its PHSI, bringing it to 70.4, which is 5.6% lower than a year ago.
  • South: The South experienced a more significant drop of 5.5% to 83.7, reflecting a 10.4% decrease from the prior year.

Conclusion

The increase in pending home sales in the West offers a glimmer of optimism for the broader U.S. housing market. While challenges remain, particularly in year-over-year comparisons, the current trends indicate that the region could be on the path to recovery. As inventory levels rise and mortgage rates potentially stabilize, the Western housing market may continue to attract buyers and investors alike, fostering a healthier, more balanced real estate environment.