Pending home sales slide in April

Pending home sales declined in April, the National Association of Realtors reported.

The Pending Home Sales Index (PHSI), a forward-looking indicator of contract signings, dropped 4.4% to 106.2 in April. In contrast, year-over-year signings jumped 51.7% following last year’s pandemic-related lockdowns. 

An index of 100 is equal to the level of contract activity in 2001.

“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 said that he anticipates the housing supply to improve as a whole as soon as autumn. He points to an increase in the comfortability of those listing, as well as a rise in sellers after the conclusion of the eviction moratorium or as they exit forbearance.

The "Hottest Housing Markets," according to Realtor.com, revealed that out of the largest 40 metros, the most improved metros over the past year, as of May 13, were Detroit-Warren-Dearborn, Mich.; Tampa-St. Petersburg-Clearwater, Fla.; Austin-Round Rock, Texas; Jacksonville, Fla.; and Riverside-San Bernardino-Ontario, Calif.

“The Midwest region, which has the most affordable homes, was the only region to notch a gain in the latest month,” Yun noted. “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.”

Here’s how pending home sales performed by region:

• The Northeast PHSI declined 12.9% to 85.3 in April, a 96.5% jump from a year ago. 
• In the Midwest, the index increased 3.5% to 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 April 2020. 
• The index in the West decreased 2.6% in April to 92.0, up 57.3% from a year prior.