Pending home sales dip amid severe supply shortage
Buyers found the lack of available homes too much in April with all major regions failing to show any activity gains.
The Pending Home Sales Index from the National Association of Realtors was down 1.3% to a reading of 106.4, following two monthly increases including an upwardly revised 107.8 reading in March.
The index has fallen year-over-year for four straight months and was down 2.1% in April compared to a year earlier.
The dip in pending home sales meant the third-lowest level in the past year.
"Pending sales slipped in April and continued to stay within the same narrow range with little signs of breaking out," said NAR chief economist Lawrence Yun
The PHSI in the Northeast remained at 90.6, 2.1% below a year ago. In the Midwest it was down 3.2% to 98.5, 5.1% lower than April 2017. In the South it declined 1.05 to 127.3, 2.7% higher than last April. In the West it slipped 0.4% to 94.4, 4.6% below a year ago.
Mortgage rates, gas prices may dampen demand
Yun added that the underlying sales data and feedback from Realtors show that buyers demand remains strong and the competitive market means listings are typically going under contract in under a month with increasing incidences of multiple offers.
However, rising mortgage rates and higher gas prices could dampen that demand if the trend continues while supply remains desperately restrained.
"The combination of paying extra at the pump, while also needing to save more for a down payment because of higher rates and home prices, may weigh on the psyche of those looking to buy," he said.
Yun’s forecast for existing home sales for the whole of 2018 is 5.54 million, up 0.5% from last year. Median prices are expected to rise 5.1%.
