NAR: Pending Home Sales Drop 4.4% in April Despite YoY Surge

Housing inventory constraints are at least partially to blame for pending home sales dipping in April, according to the latest report from the National Association of REALTORS® (NAR).

NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, showed a decline of 4.4% last month, falling to 106.2. Despite the monthly reduction, year-over-year contract signings saw an uptick of 51.7% compared to the previous year’s record low drop in sales brought on by the pandemic shutdowns.

All four U.S. regions recorded year-over-year increases, but only the Midwest enjoyed month-over-month gains in pending home sales contract transactions.

Experts at NAR expect an increase in housing supply as soon as the fall. The injection of inventory is expected to come from sellers that are more willing to list their homes as the country reopens and eviction moratoriums end.

Regional Breakdown:

-12.9% MoM — Now 85.3 PHSI
+96.5% YoY

+ 3.5% MoM — 101.1 PHSI
+ 39.4% YoY

– 6.1% MoM — 128.9 PHSI
+ 45.3% YoY

 -2.6% MoM — 92.0 PHSI
+57.3% YoY

What the industry is saying:

“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes. The upper-end market is still moving sharply as inventory is more plentiful there.

“The Midwest region, which has the most affordable homes, was the only region to notch a gain in the latest month. Some buyers from the expensive cities in the West and Northeast, who have the flexibility to move and work from anywhere, could be opting for a larger-sized home at a lower price in the Midwest.” — Lawrence Yun, NAR Chief Economist

“The April drop in pending home sales showed the impact of the stiff 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. The drop in April pending sales was also consistent with weaker data on purchase applications that MBA reported during the month. 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.” — Joel Kan, Mortgage Bankers Association AVP of Economic and Industry Forecasting

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