Affordability stings April pending home sales
Supply of home priced under $250,000 is just 3.3 months.
An underwhelming affordable home supply, a trend that has haunted the housing market for over a year, put another dent in the latest pending home sales report.
Pending home sales are down 1.5% for April, according to the latest Pending Home Sales Index (PHSI) released by the National Association of Realtors (NAR).
A forward-looking indicator based on contract signings, the PHSI dropped to 104.3 last month from 105.9 in March. Year-over-year contract signings declined 2%, making the 16th straight month of annual decreases.
“Though the latest monthly figure shows a mild decline in contract signings, mortgage applications and consumer confidence have been steadily rising,” said Lawrence Yun, NAR chief economist. “It’s inevitable for sales to turn higher in a few months.”
By region, the PHSI in the Northeast declined 1.8% to 88.9 in April and is now 2.1% below a year ago. In the Midwest, the index grew 1.3% to 96.8 in April, 2.4% lower than April 2018.
Pending home sales in the South fell 2.5% to an index of 124 in April, which is 1.8% lower than last April. The index in the West dropped 1.8% in April to 93.5 and fell only 1.5% below a year ago.
Affordability, or a lack of, continues to be a theme when it comes to sales.
“Home price appreciation has been the strongest on the lower-end as inventory conditions have been consistently tight on homes priced under $250,000. Price conditions are soft on the upper-end, especially in high tax states like Connecticut, New York and Illinois,” Yun said.
The supply of inventory for homes priced under $250,000 stood at just 3.3 months in April. But homes priced at $1 million and above recorded an inventory of 8.9 months for the month.
San Jose-Sunnyvale-Santa Clara, Calif., Seattle-Tacoma-Bellevue, Wash., San Francisco-Oakland-Hayward, Calif., Portland-Vancouver-Hillsboro, Ore.-Wash., and Nashville-Davidson-Murfreesboro-Franklin, Tenn., saw the largest increase in active listings in April compared to a year ago.
“We are seeing migration to more affordable regions, particularly in the South, where there has been recent job growth and homes are more affordable,” Yun said.
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