April Pending Home Sales Slide as Inventory Remains Low
The National Association of Realtors (NAR) Monday morning released its data on pending sales of existing homes for the month of April. The pending home sales index fell 1.3% from an upwardly revised March reading of 107.8 to an April reading of 106.4. The April index is down 2.1% compared with April 2017.
March sales declined in three of four NAR geographical regions.
The consensus estimate called for a month-over-month increase of 0.4% in pending sales. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.
The index has been above 100 (the “average” reading) for 42 straight months.
The NAR’s chief economist, Lawrence Yun, noted:
Feedback from Realtors®, as well as the underlying sales data, reveal that the demand for buying a home 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. The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels.
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.
By region, April pending home sales remained flat with an index score of 90.6 in the Northeast, down 2.1 points compared with April 2017. In the West, sales dipped 0.4 points to an index score of 94.4, down 4.6 points compared to last year’s index.
Sales dropped 3.2 points in the Midwest to an index score of 98.5, and remain down 5.1 points year over year for the month. Sales in the South slipped a point to 127.3 in April and are now 2.7 points above the year-ago index score.
Existing-home sales closed 2017 at around 5.51 million. The NAR’s Yun expects 2018 sales of around 5.54 million, down from a prior estimate of 5.61 million. The national median existing-home price is expected to rise by around 5.1% this year. In 2017 prices rose 5.7% and sales of existing homes increased by 1.1%. In 2016, sales of existing homes increased 3.8% and prices rose 5.1%.