Pending Home Sales Slip

Pending home sales slumped in April for the second month and were down year-over-year nationally, the National Association of Realtors said yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined by 1.3 percent to 109.8 in April from a downwardly revised 111.3 in March. The index fell 3.3 percent from a year ago, the first year-over-year decline since last December and the largest since a 7.1 percent drop in June 2014.

“April’s big decline is disturbing, but may have more to do with exceptionally lean inventories and the late Easter holiday,” said Wells Fargo Securities Senior Economist Mark Vitner.

Regionally, only the west saw an increase in contract signings last month, NAR said. The index in the west jumped 5.8 percent in April to 100.0–though it remains 4.2 percent below a year ago. The Pending Home Sales Index in the northeast decreased 1.7 percent to 97.2 and in the Midwest the index fell 4.7 percent to 104.4. Pending home sales in the south declined 2.7 percent to an index of 125.9.

“The large declines in the northeast and Midwest suggest seasonal factors exaggerated the recent slide in pending home sales,” Vitner said. “With sales stronger earlier, there was less of a bounce back this spring, which results in a decline after seasonal adjustment.”

But Vitner cautioned that applications for home-purchase loans (as opposed to refinances) fell 1.4 percent in late May and have declined for the past three weeks despite lower mortgage rates.

NAR Chief Economist Lawrence Yun said contract activity is “fading” this spring because weak supply levels harm affordability. “Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” he said.

Yun noted that prospective buyers are feeling a “double whammy” this spring of inventory 9 percent lower than a year ago “and price appreciation that’s much faster than any rise they’ve likely seen in their income.”