Pending Home Sales fell 2.7% from April to May, which was a larger decline than economists had forecasted. The West, Midwest and South all saw a drop in contract signings on a monthly basis, with only the Northeast posting gains in May. Overall, sales were down 22.2% when compared to May of last year.

Pending Home Sales are a crucial measure for taking the pulse of the housing market. The data is considered a forward-looking indicator of home sales because it measures signed contracts on existing homes, which represent around 90% of the market.

What’s the bottom line? Lawrence Yun, chief economist for the National Association of REALTORS®, explained, “The lack of housing inventory continues to prevent housing demand from being fully realized.” And there is demand among buyers, as he noted that we’re seeing “approximately three offers for each listing.” Quite simply, if there were more homes listed for sale, we’d have a much higher rate of signed contracts.