Pending home sales flat from March to April
Low inventory combined with a lack of affordability continues to stifle spring sales nationally, though numbers were up in some regions.
- For its April pending home sales report, NAR tallied no change month over month at a national level.
- Pending home sales were up in the Western and Midwest regions, but down significantly in the Northeast.
- Though relatively flat month over month, the South’s pending home index remains quite high.
In a typical spring and early summer market, buyers would be out in droves and residential home sales would be at their peak. But nothing about the current market is typical.
According to the National Association of Realtors' latest pending home sales report, there was no month-over-month uptick in pending home sales between March and April, at least on a national level. By tracking pending home sales, NAR economists and researchers look at signed contracts of homes as a measure of housing activity and the health of the economy.
No news may be good news
The lack of movement in pending home sales isn't necessarily bad news — pending sales did not fall month over month, unlike existing home sales, despite a macro environment where the Fed continues to aggressively fight inflation, the banking sector has been in turmoil, and mass layoffs swept the nation earlier this year.
On a regional level, however, there were some ups and downs. In the Western region, which includes all states along the West Coast through New Mexico, Colorado, Wyoming and Idaho, pending home sales were up 4.2% month-over-month. And in the Midwest, which includes the Great Lakes region, pending home sales were up 3.6% month-over-month. In the South, pending home sales were largely flat, ticking up just 0.1%.
The outlier, and the region that pushed the national average down, was the Northeast. The region includes all of the New England states, and pending sales were down by a dramatic 11.3%.
While the South saw only a slight gain for April, it should be noted that the region has the highest overall Pending Home Sales Index (PHSI) at 99.6. The Midwest is the second highest at 78.4, followed by the West at 62.2 and the Northeast at 59.1.
The experts weigh in
What do all of these numbers mean?
"Not all buying interests are being completed due to limited inventory," NAR Chief Economist Lawrence Yun said in the report. "Affordability challenges certainly remain and continue to hold back contract signings, but a sizable increase in housing inventory will be critical to get more Americans moving."
Bright MLS chief economist Lisa Sturtevant said that high borrowing costs and low inventory are hampering home sales during what would otherwise be a more robust spring market. Today, pending home sales are down more than 20% from where they were a year ago and are even lower compared to the pre-pandemic market in 2019.
And there's one other notable albatross around the U.S. housing market's neck, Sturtevant suggested.
"A big wildcard in the housing market right now is the debt ceiling debate. While it would be unprecedented, if an agreement is not reached and the government defaults on its debt, mortgage rates likely will spike, which could significantly reduce homebuyer demand. Even the extended negotiations are beginning to rattle markets and bring down consumer confidence."