- Inventory is down 9.0 percent from a year ago, causing a constraint on buyer demand.
The National Association of Realtors Pending Home Sales Index is down for the second consecutive month after a strong end to Q4 2016 and a 5.5 percentage point rebound in January.
April’s PHSI, which is based on contract signings, dipped to 109.8, a 1.3 percentage point drop from March’s downwardly revised 111.3.
NAR chief economist Lawrence Yun says low inventory levels once again have hindered pending sales, and buyer foot traffic and interest aren’t translating into more sales.
“Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” Yun said. “Realtors are indicating that foot traffic is higher than a year ago, but it’s obviously not translating to more sales.”
“Prospective buyers are feeling the double whammy this spring of inventory that’s down 9.0 percent from a year ago and price appreciation that’s much faster than any rise they’ve likely seen in their income,” he added.
Regional breakdown
- Northeast: PHSI declined 1.7 percent to 97.2 in April, 0.6 percent below a year ago.
- Midwest: PHSI declined 4.7 percent to 104.4 in April, 6.1 percent lower than April 2016.
- South: PHSI declined 2.7 percent to 125.9 in April, down 2.3 percent year over year.
- West: PHSI increased 5.8 percent in April to 100.0, 4.2 percent lower than the same time last year.
“The unloading of single-family homes purchased by real estate investors during the downturn for rental purposes would also go a long way in helping relieve these inventory shortages,” said Yun.
“To date, there are no indications investors are ready to sell. However, they should be mindful of the fact that rental demand will soften as the overall population of young adults starts to shrink in roughly five years.”
About the PHSI
NAR uses a large national sample of signed residential property sale contracts to build its monthly pending home sales index. The sample size typically represents about 20 percent of transactions for existing-home sales.
The index level was benchmarked to 100 in 2001, which was the first year to be examined. Existing-home sales in 2001 were in the 5 million to 5.5 million range, which is considered normal for the population in the U.S.
