April Pending Home Sales Lose Steam

After two months of modest increases, pending home sales dipped in April to their third-lowest level over the past year, the National Association of Realtors reported yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined by 1.3 percent to 106.4 in April from an upwardly revised 107.8 in March. With last month’s decrease, the index is down on an annualized basis (2.1 percent) for the fourth straight month.

Regionally, only the Northeast held steady at 90.6 but fell by 2.1 percent from a year ago. In the Midwest the index decreased by 3.2 percent to 98.5 and by 5.1 percent from a year ago. Pending sales in the South declined 1.0 percent to 127.3 in April but were 2.7 percent higher than last April. The West fell by 0.4 percent in April to 94.4 and by 4.6 percent from a year ago.

NAR Chief Economist Lawrence Yun said housing shortages in much of the country prevent any indication of housing breaking out. “Demand for buying a home is very robust,” he said. “Listings are typically going under contract in under a month1, and instances of multiple offers are increasingly common and pushing prices higher. The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels.”

Pending home sales “remains volatile,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Demand does not appear to be the problem, however.”

Vitner noted while low inventories are restraining sales across much of the country, the problem is most acute in the West, where pending sales have now declined every month going back to October 2017.