Like new and existing sales, pending home sales felt the strain of exhausted home inventory in April ― dropping 4.4% from the previous month to an index of 106.2, according to Thursday data from the National Association of Realtors.
Against a pandemic landscape from last April, however, pending home sales signings are 51.7% higher year-over-year.
“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” said Lawrence Yun, NAR’s chief economist. “The upper-end market is still moving sharply as inventory is more plentiful there.”
Yun anticipates housing supply to 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 forbearance periods.
The April drop in pending home sales shows the impact of continued steep competition for the limited number of homes for sale and the upward pressure on home prices. Adding to the supply crunch is the fact that homebuilders this spring have faced escalating costs, noted Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association.
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“The drop in April pending sales was also consistent with weaker data on purchase applications that MBA reported during the month,” Kan said. “The large year-over-year increase in pending sales was relative to April 2020, a month where pandemic-related restrictions depressed most home-buying activity.”
This time last year, pending homes sales plummeted 21.8%, which Yun predicted would be the bottom for the market. That sentiment proved to be true as pending home sales jumped 44% the next month, and eventually reached a record high by August as low mortgage rates balanced the market.
Regionally, pending home sales dropped month over month in all U.S. regions except the Midwest. America’s bread basket saw home sales increase 3.5% to an index 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, up 45.3% from last year, while the index in the West decreased 2.6% in April to 92.0, up 57.3% from a year prior.
In the Northeast, which saw a massive exodus at the height of the pandemic as families fled big cities, pending sales fell 12.9% month over month to 85.3, but that represents nearly 100% from April of last year.
Thursday’s data also revealed that out of the largest 40 metros, the most improved metros over the past year, were Detroit-Warren-Dearborn, Mich.; Tampa-St. Petersburg-Clearwater, Fla.; Austin-Round Rock, Texas; Jacksonville, Fla.; and Riverside-San Bernardino-Ontario, Calif.