A report released by the National Association of Realtors on Thursday showed pending home sales in the U.S. unexpectedly tumbled to their lowest level in nearly a year in the month of April.
NAR said its pending home sales index plunged by 4.4 percent to 106.2 in April after surging up by 1.7 percent to a downwardly revised 111.1 in March.
The steep drop surprised economists, who had expected pending home sales to increase by 0.8 percent compared to the 1.9 percent jump originally reported for the previous month.
With the unexpected pullback, the pending home sales index slumped to its lowest level since hitting 101.4 in May of 2020.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
“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.”
Despite the monthly decrease, pending home sales in April were up by 51.7 percent compared to a year ago, when pandemic-related shutdowns caused sales to slump to an all-time low.
The report showed pending home sales in the Northeast plummeted by 12.9 percent in April, while pending sales tumbled by 6.1 percent in the South and slumped by 2.6 percent in the West.
Only the Midwest witnessed a month-over-month increase, with pending home sales in the region spiking by 3.5 percent.
“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,” Yun said, noting the Midwest has the most affordable homes.
Looking ahead, Yun said he expects housing supply to improve as soon as autumn, pointing 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.
On Tuesday, the Commerce Department released a separate report showing a substantial decrease in new home sales in the month of April.
The report said new home sales slumped by 5.9 percent to an annual rate of 863,000 in April after jumping by 7.4 percent to a significantly downwardly revised rate of 917,000 in March.
Economists had expected new home sales to tumble by 7.0 percent to a rate of 950,000 from the 1.021 million originally reported for the previous month.
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