Pending home sales dropped in May

Data released by the National Association of Realtors (NAR) points that pending sales of existing homes dropped to the lowest level in 6 years in May. The index declined 3.5% to a reading of 97.7, following declines in the previous two months. A year ago, it stood at 112.7. A reading of 100 represents the average contract activity in 2001.

Pending sales are purchases in which the contract has been signed, but the deal has not been closed yet. Thus, the index is considered a near-term indicator of future market activity, and consecutive monthly declines could only mean that home buying isn’t picking up any time soon. The index declined in the South and Midwest, and grew in the West and Northeast.

NAR’s senior economist Lawrence Yun said that “some transactions are being postponed” due to market disruptions. He didn’t mention, however, how long he expects buyers to keep “postponing” purchases.