Pending home sales flat in April

All four U.S. regions see double-digit slides from a year ago.
A snapshot of pending home sales for April from the National Association of Realtors. (Click to enlarge.)

Pending home sales were flat in April despite three regions of the nation posting monthly gains, the National Association of Realtors (NAR) reported this morning.

The Pending Home Sales Index (PHSI) remained at 78.9 in April with no change from the prior month.

Year-over-year pending transactions fell 20.3%, however.

The PHSI is a forward-looking indicator of home sales based on contract signings. An index of 100 is equal to the level of contract signings in April 2001.

According to Lawrence Yun, chief economist of the NAR, a limited housing supply played some part in April’s flat sales. But Yun also says more homes need to be built for an uptick to happen.

“Not all buying interests are being completed due to limited inventory,” said NAR Chief Economist Lawrence Yun. “Affordability challenges certainly remain and continue to hold back contract signings, but a sizeable increase in housing inventory will be critical to get more Americans moving.”

Here’s how pending home sales performed on a regional basis:

  • The Northeast PHSI dropped 11.3% from last month to 59.1, a decrease of 21.8% from April 2022. 
  • The Midwest index improved 3.6% to 78.4 in April, down 21.4% from one year ago.
  • The South PHSI increased 0.1% to 99.6 in April, sinking 16.7% from the prior year. 
  • The West index augmented 4.7% in April to 62.2, sliding 26.0% from April 2022.
Although April sales were flat, the NAR says more homes need to be built for demand to be met.

“Minor monthly variations in regional activity are typical,” said Yun. “However, cumulative results over many years clearly point towards a much greater number of home sales in the South.”

At 99.6, the PHSI in the South is only slightly lower than 100.

“The South’s pending home sales activity is similar to that of 2001, but the Midwest’s activity has decreased by 22% in that same period, and the Northeast and West regions are both about 40% lower than they were in 2001,” Yun added.

Earlier this month, the NAR reported this morning that total existing-home sales declined 3.4% in April to a seasonally adjusted rate of 4.28 million. On a year-over-year basis, existing-home sales are down 23.2% from a rate of 5.57 million in April 2022.

Unsold inventory sits at a 2.9-month supply at the current sales pace, up from 2.6 months in March and 2.2 months in April 2022.

Existing single-family home sales decreased to a seasonally adjusted annual rate of 3.85 million in April, down 3.5% from 3.99 million in March and 22.4% from the previous year.

But this week the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported that new single-family home sales in April increased 4.1% to an adjusted annual rate of 683,000 compared to the revised March rate of 656,000.

Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala., said a lack of existing inventory supported sales of newly-built, single-family homes in April.

The latest New Monthly Residential Sales report also notes that the April reading of 683,000 units is the number of homes that would sell if this pace continued for the next 12 months.

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