The lack of inventory continued to chip away at pending home sales last month, but the home-buying craze is still going strong.
The National Association of REALTORS®’ Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—fell 4.4% month-over-month in April. Still, pending home sales are up nearly 52% compared to a year ago. However, NAR notes that the year-over-year comparison is skewed since it’s from a time when pandemic-related shutdowns prompted home sales to dip to all-time lows.
Nevertheless, “contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” says Lawrence Yun, NAR’s chief economist. “The upper-end market is still moving sharply as inventory is more plentiful there.”
Yun anticipates the overall housing supply to see an increase in the fall as more homeowners warm up to the idea of selling. An increase in inventory is largely predicted to occur as vaccine rates increase and sellers realize the equity they’ve accumulated. Also, more inventory likely will arise once the end of the eviction moratorium at the end of June as homeowners exit forbearance.
For now, the Midwest is the only region seeing a month-over-month increase in pending home sales, NAR reports. “The Midwest region, which has the most affordable homes, was the only region to notch a gain in the last month,” Yun says. “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.”