After two months of modest increases, pending home sales fell to their third-lowest level over the past year, according to the latest report from the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined by 1.3% in April to 106.4, up from 107.8 in March. With April’s decrease, the index is down 2.1% marking the fourth consecutive month of annual declines.
“Pending sales slipped in April and continued to stay within the same narrow range with little signs of breaking out,” NAR Chief Economist Lawrence Yun said.
“Feedback from Realtors, as well as the underlying sales data, reveal that the demand for buying a home is very robust," Yun said. “Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher.”
Yun also stated that reaching the market will remain a challenge for many home buyers if supply remains it the current low levels.
Summer months could prove to be difficult for the housing market: “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 said. “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 said.
Yun forecasts existing home sales will come in around 5.54 million in 2018, an increase from 5.51 million in 2017. The national median existing-home price, he predicts, will increase about 5.1% in 2018. For comparison, existing home sales increased 1.1% in 2017 while prices rose 5.7%.
In April, the PHSI remained unchanged at 90.6 a 2.1% decrease from 2017. The Midwest index decreased by 3.2% at 98.5, declining 5.1% from this time last year.
Lastly, pending home sales in the south declined 1% to a 127.3, which is still 2.7% higher than last April. The index in the west modestly declined 0.4% to 94.4 and is 4.6% below 2017.