After two straight months of modest increases, pending home sales in the United States dipped in April to their third lowest level over the past year, the latest index shows.
Overall sales fell by 1.3% in April month on month and are now down by 2.1% year on year, the fourth month in a row when annual prices have declined, according to the data from the National Association of Realtors (NAR).
A severe shortage of homes for sale is hindering the housing market. ‘Pending sales slipped in April and continued to stay within the same narrow range with little signs of breaking out,’ said Lawrence Yun, NAR chief economist.
He revealed that feedback from real estate agents as well as the underlying sales data show that the demand from buyers is very robust. ‘Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher,’ he explained.
‘The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels,’ he said, adding that heading into the summer months, if low supply and swift price growth were not enough of a headwind for the housing market, rising mortgage rates and gas prices could lead to hesitation among some would be buyers.
‘The combination of paying extra at the pump, while also needing to save more for a down payment because of higher rates and home prices, may weigh on the psyche of those looking to buy,’ Yun pointed out.
‘For now, the economy is very healthy, job growth is holding steady and wages are slowly rising. However, it all comes down to overall supply. If more new and existing homes are listed for sale, it would allow home prices to moderate enough to stave off inflationary pressures and higher rates,’ he added.
Yun still forecasts that existing home sales in 2018 are set to increase 0.5% to 5.54 million and the national median existing home price is expected to increase around 5.1%. This compares with a sales rise of 1.1% and price growth of 5.7% in 2017.
A breakdown of the figures shows that in the Northeast sales were stagnant month on month and down 2.1% compared to a year ago while in the Midwest the index decreased 3.2% and sales are 5.1% lower than April 2017.
Pending home sales in the South declined 1% in April but they are still 2.7% higher than last April while in the West they inched backward by 0.4% and are 4.6% below a year ago.
