According to the National Association of Realtors, U.S. pending home sales took a step backward in April 2021. All four U.S. regions recorded year-over-year increases, but only the Midwest witnessed month-over-month gains in terms of pending home sales contract transactions.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, fell 4.4% to 106.2 in April. Year-over-year, signings jumped 51.7% as last year's pandemic-related shutdowns slumped sales to an all-time low. An index of 100 is equal to the level of contract activity in 2001.
"Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes," said Lawrence Yun, NAR's chief economist. "The upper-end market is still moving sharply as inventory is more plentiful there."
Yun anticipates housing supply to improve as a whole as soon as autumn. He points to an increase in the comfortability of those listing, as well as a rise in sellers after the conclusion of the eviction moratorium or as they exit forbearance.
Realtor.com's Hottest Housing Markets data revealed that out of the largest 40 metros, the most improved metros over the past year, as of May 13, were Detroit-Warren-Dearborn, Mich.; Tampa-St. Petersburg-Clearwater, Fla.; Austin-Round Rock, Texas; Jacksonville, Fla.; and Riverside-San Bernardino-Ontario, Calif.
"The Midwest region, which has the most affordable homes, was the only region to notch a gain in the latest month," Yun noted. "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."
The MBA's AVP of Economic and Industry Forecasting Joel Kan commented, "The April drop in pending home sales showed the impact of the stiff competition for the limited number of homes for sale and the upward pressure on home prices. Adding to the supply crunch is the fact that homebuilders this spring have faced escalating costs. The drop in April pending sales was also consistent with weaker data on purchase applications that MBA reported during the month. The large year-over-year increase in pending sales was relative to April 2020, a month where pandemic-related restrictions depressed most homebuying activity."