April Pending Home Sales Falter

Pending home sales declined in April after a slight gain in March, the National Association of Realtors reported yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, fell by 1.5% to 104.3 in April, down from 105.9 in March. Year-over-year contract signings declined by 2.0%, marking the 16th straight month of annual decreases.

Only the Midwest saw growth, rising by 1.3% to 96.8 in April, 2.4% lower than a year ago. Pending home sales in the South fell by 2.5% to 124.0 in April and by 1.8% from a year ago. The index in the West dropped by 1.8% in April to 93.5 and fell by 1.5% from a year ago. The Northeast declined by 1.8% to 88.9 in April and by 2.1% from a year ago

“April’s pending home sales data showed a slight decline on a seasonally adjusted basis. However, there was a year-over-year gain in the unadjusted data, with every region except for the West showing an uptick in contract signings,” said Mortgage Bankers Association Chief Economist Mike Fratantoni. “Pending and existing home sales data continue to paint a different picture of the housing market, compared to the recent strength we have seen in new home sales and purchase application data. Purchase applications have increased 15 straight weeks on an annual basis, and it’s likely this positive momentum will lead to increased sales activity as we enter the summer.”

NAR Chief Economist Lawrence Yun said the sales dip has yet to account for some of the more favorable trends toward homeownership, such as lower mortgage rates. “Though the latest monthly figure shows a mild decline in contract signings, mortgage applications and consumer confidence have been steadily rising,” he said. “It’s inevitable for sales to turn higher in a few months.”

Yun said home price appreciation has been strongest on the lower end, as inventory conditions have been consistently tight on homes priced under $250,000. “Price conditions are soft on the upper-end, especially in high-tax states [such as] Connecticut, New York and Illinois.”

Yun added trends point to migration to more affordable regions, particularly in the South, “where there has been recent job growth and homes are more affordable.”