Pending home sales plummet in April

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Pending home sales plummet in April

By HBSDealer Staff - 05/28/2020
Pending home sales fell for a second straight month, due largely to the impact of the coronavirus crisis.

The latest Pending Home Sales Index (PHSI) from the National Association of Realtors plummeted 21.8% to 69 in April. Year-over-year contract signings also saw a steep decline of 33.8%. An index of 100 is equal to the level of contract activity in 2001.

“With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases,” said Lawrence Yun, NAR’s chief economist.

The latest pending home sales numbers reveal the greatest decline since the NAR began tracking pending transactions in January 2001. But Yun said that he expects that April will be the lowest point for pending contracts, and the month of May, consequently, will be the lowest point for closed sales.

“While coronavirus mitigation efforts have disrupted contract signings, the real estate industry is ‘hot’ in affordable price points with the wide prevalence of bidding wars for the limited inventory,” he said. “In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”

The NAR’s most recent Flash Survey points to a rebound for pending sales as 34% of Realtors reported successfully completing nearly all aspects of transactions while adhering to social distancing procedures.

New listings were up in April 2020 from one year ago in 34 metro areas, including Virginia Beach, Va., Sioux Falls, S.D., Odessa, Texas, Summerville, Ga., and Las Cruces, N.M.

“Given the surprising resiliency of the housing market in the midst of the pandemic, the outlook for the remainder of the year has been upgraded for both home sales and prices, with home sales to decline by only 11% in 2020 with the median home price projected to increase by 4%,” Yun said. “In the prior forecast, sales were expected to fall by 15% and there was no increase in home price.”

Here’s how the latest PHSI breaks down by region:

  • In the Northeast the  PHSI sank 48.2% to 42.6 in April, 52.6% lower than a year ago.

  •  In the Midwest, the index dropped 15.9% to 72.0 last month, down 26.0% from April 2019.

  • Pending home sales in the South fell 15.4% to an index of 87.6 in April, a 29.6% decrease from April 2019. 

  • The index in the West slipped 20.0% in April 2020 to 57.1, down 37.2% from a year ago.