Pending home sales were sluggish in April as low supply reared its head, down 1.3 percent in the National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI). The PHSI posted 109.8 in April, down from 111.3 in March. The Index is based on contract signings.
“Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” says Lawrence Yun, chief economist at NAR. “REALTORS® are indicating that foot traffic is higher than a year ago, but it’s obviously not translating to more sales.
“Prospective buyers are feeling the double whammy this spring of inventory that’s down 9.0 percent from a year ago and price appreciation that’s much faster than any rise they’ve likely seen in their income.”
The West fared best in April, with pending home sales up 5.8 percent to an Index reading of 100.0, though still down 4.2 percent from one year ago. The Midwest saw a 4.7 percent decrease in the Index to 104.4, while the South saw a 2.7 percent decrease to 125.9, and the Northeast, a 1.7 percent decrease to 97.2.
Scarce supply will remain the status quo, according to Yun, unless more homes are made available, especially from the investor side.
“The unloading of single-family homes purchased by real estate investors during the downturn for rental purposes would also go a long way in helping relieve these inventory shortages,” Yun says. “To date, there are no indications investors are ready to sell; however, they should be mindful of the fact that rental demand will soften as the overall population of young adults starts to shrink in roughly five years.”
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