Like new and existing sales, pending home sales felt the strain of depleted home inventory in April, dropping 4.4% from the previous month to a rate of 106.2, according to Thursday data from the National Association of Real Estate Agents.
However, in the face of a pandemic outlook last April, pending home sales firms are 51.7% higher year-over-year.
“Contract signing is approaching pre-pandemic levels after the large increase due to a lack of sufficient supply of affordable housing,” said Lawrence Yun, chief economist at NAR. “The high-end market is still rocketing as inventory becomes more plentiful.”
Yun anticipates that the housing supply will improve as a whole as soon as this fall. Factors that would increase inventory include homeowners feeling more comfortable listing their properties and the end of leniency periods.
The April drop in pending home sales shows the impact of continued stiff competition for the limited number of homes for sale and upward pressure on home prices. Adding to the supply crisis is the fact that home builders this spring have faced rising costs, said Joel Kan, associate vice president of economic and industrial forecasting for the Mortgage Bankers Association.
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“The decline in pending sales for April was also consistent with the weaker data on shopping applications that MBA reported during the month,” Kan said. “The big year-on-year increase in pending sales was relative to April 2020, a month in which pandemic-related restrictions depressed most of the home buying activity.”
At this time last year, pending home sales plummeted 21.8%, which Yun predicted would be the bottom line for the market. That sentiment turned out to be true, as pending home sales jumped 44% the following month and finally hit a record in August as low mortgage rates balanced the market.
Regionally, pending home sales fell month-over-month in every region of the US except the Midwest. In the United States bread basket, home sales increased 3.5% to a rate of 101.1 last month, up 39.4% from April 2020. Pending home sales transactions in The South fell 6.1% to an index of 128.9 in April, 45.3% more than last year, while the index in the West fell 2.6% in April to 92.0, a 57 , 3% more than the previous year.
In the Northeast, which saw a mass exodus at the height of the pandemic as families fled large cities, pending sales fell 12.9% month-over-month to 85.3, but that’s almost 100% since April. from last year.
Thursday’s data also revealed that of the 40 largest metropolitan areas, the metropolitan areas that improved the most over the past year were Detroit-Warren-Dearborn, Michigan; Tampa-St. Petersburg-Clearwater, Florida; Austin-Round Rock, Texas; Jacksonville, Fla .; and Riverside-San Bernardino-Ontario, California.