Pending home sales in the US experienced an expected collapse in May after the expiration of a deadline to obtain a government homebuyer tax credit.
The National Association of Realtors said it pending home sales index tumbled 30.0% to 77.6 based on contracts signed in May.
The index had climbed for three months in a row in April, when it hit 110.9 as homebuyers rushed to sign contracts before the April 30 deadline to obtain tax credits.
Though the drop in pending sales was expected due to the tax incentive, it was much steeper than the 10.5% decline forecast by most analysts.
On a 12-month basis, the index was 15.9% lower than the May 2009 reading of 92.3, NAR said.
‘Consumers are rational and they rushed to meet the tax credit eligibility deadline in April. The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June,’ said Lawrence Yun, NAR chief economist.
