If you’re in the field and feeling a slight slowdown, you’re probably right. Pending home sales (contracts signed) dipped 1.5% nationally, down 2.0% year-over-year, according to the National Association of Realtors (NAR). This marks the 16th consecutive month of annual decreases.
Pending home sales dipped 1.8% in the Northeast, 2.5% in the South, 1.8% in the West, and rose 1.3% in the Midwest.
Compared to last year, pending homes are 2.1% below a year ago, down 1.8% in the South, 1.5% lower in the West, and 2.4% lower in the Midwest during the same time period.
This indicator is forward-looking and lets us know how closings will look in the coming months.
NAR Chief Economist, Dr. Lawrence Yun said the sales dip has not yet reflected the market shifts that work in favor of homeownerships.
“Though the latest monthly figure shows a mild decline in contract signings, mortgage applications and consumer confidence have been steadily rising,” he said. “It’s inevitable for sales to turn higher in a few months.”
Dr. Yun noted that home price appreciation has been strongest on homes priced under $250,000 as inventory levels have been perpetually tight for several years. Price conditions are soft on upper-end homes, “especially in high tax states like Connecticut, New York and Illinois,” he added.
There are now signs for a rise in inventory, Dr. Yun states, digging into data from realtor.com, noting the largest increase in active listings (in April) compared to April 2018.
“We are seeing migration to more affordable regions, particularly in the South, where there has been recent job growth and homes are more affordable,” Yun said.
NAR has repeatedly pointed to housing starts by new home builders as one of the key paths to loosening up the tight inventory levels that continue to edge out willing buyers. Starts remain low, but with a healthy market, the inventory appears to be correcting, albeit slowly.