Pend­ing sales con­tinue down­ward trend in April

The Day - - HOME SOURCE - By Day Mar­ket­ing

Fewer homes were go­ing un­der con­tract in April, con­tin­u­ing a 2018 trend that real estate pro­fes­sion­als at­tribute to an on­go­ing short­age of avail­able homes for sale.

In the lat­est up­date of its Pend­ing Home Sales In­dex, the Na­tional As­so­ci­a­tion of Real­tors set a fig­ure of 106.4. This was down 1.3 per­cent from March's up­wardly re­vised fig­ure of 107.8, as well as a year-over-year decline of 2.1 per­cent.

The Pend­ing Home Sales In­dex is a mea­sure of trans­ac­tions where a con­tract has been signed but a sale has not been fi­nal­ized. This ac­tion typ­i­cally takes place within two months, mak­ing the fig­ure a good in­di­ca­tor of sales ac­tiv­ity in the near fu­ture.

A fig­ure of 100 is equal to the average con­tract ac­tiv­ity in 2001, which fell be­tween 5 mil­lion and 5.5 mil­lion ex­ist­ing home sales. This level of sales is con­sid­ered nor­mal for the cur­rent pop­u­la­tion of the United States.

"Feed­back from Real­tors, as well as the un­der­ly­ing sales data, re­veal that the de­mand for buy­ing a home is very ro­bust. List­ings are typ­i­cally go­ing un­der con­tract in un­der a month, and in­stances of mul­ti­ple of­fers are in­creas­ingly com­mon and push­ing prices higher," said Lawrence Yun, chief econ­o­mist at the Na­tional As­so­ci­a­tion of Real­tors. "The un­for­tu­nate real­ity for many home shop­pers is that reach­ing the mar­ket will re­main chal­leng­ing if sup­ply stays at these dire lev­els."

In its ex­ist­ing home sales re­port for April, the Na­tional As­so­ci­a­tion of Real­tors de­ter­mined that there were 1.8 mil­lion homes for sale. While this was a sub­stan­tial 9.8 per­cent in­crease from the pre­vi­ous month, it was still down 2.5 per­cent from April 2017 – the 35th straight month of an­nual in­ven­tory de­creases.

The Pend­ing Home Sales In­dex grew slightly from the pre­vi­ous month in Fe­bru­ary and March, but has gone down on an an­nual ba­sis for four con­sec­u­tive months. April marked the third low­est pend­ing sales fig­ure in the past year. Ex­ist­ing home sales have shown a yearover-year decline for three of the first four months of 2018.

Yun said higher mort­gage rates and gas prices may also be cre­at­ing more af­ford­abil­ity pres­sures for peo­ple in­ter­ested in buy­ing a home.

"For now, the econ­omy is very healthy, job growth is hold­ing steady, and wages are slowly ris­ing," he said. "How­ever, it all comes down to over­all sup­ply. If more new and ex­ist­ing homes are listed for sale, it would al­low home prices to mod­er­ate enough to stave off in­fla­tion­ary pres­sures and higher rates."

Each of the four U.S. re­gions saw a de­crease in pend­ing sales from the pre­vi­ous month, al­though the South had a year-over-year in­crease. The re­gion's PHSI of 127.3 was down 1 per­cent from March, but still 2.7 per­cent higher than April 2017.

In the North­east, the fig­ure re­mained un­changed at 90.6, which was down 2.1 per­cent from the pre­vi­ous year. The PHSI in the West dropped 0.4 per­cent from the pre­vi­ous month and 4.6 per­cent from the pre­vi­ous year to 94.4. The fig­ure of 98.5 in the Midwest marked a de­crease of 3.2 per­cent from March and 5.1 per­cent from April 2017.

De­spite the slow­down in pend­ing sales, Yun ex­pects that ex­ist­ing home sales in the U.S. will still ex­ceed last year's tally. He fore­casts that there will be 5.54 mil­lion trans­ac­tions com­pleted in 2018, which would be a yearover-year in­crease of 0.5 per­cent. He also predicts that me­dian home prices will grow by 5.1 per­cent.

In 2017, ex­ist­ing home sales rose by 1.1 per­cent while me­dian home prices jumped 5.7 per­cent.

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