What The Data Show:
Pending home sales data highlighted the tug of war between ongoing inventory challenges in the existing home market and homebuyer interest, holding at 78.9 in April even as new home sales in the same period ticked higher. Contract signings remained above the fourth quarter’s low levels but trailed the year ago pace by 20.3%. Because pending home sales or contract signings are the first major step in a home sale transaction, today’s index signals that the market faces continued headwinds from low inventory and affordability. Although buyers, sellers, and builders are all more optimistic about the housing market, asking home price growth is easing, and the typical home sales price is slipping. These point to the nudge that buyers need to act on their improving outlook.
Regional Trends Continue to Vary:
Of note, pending home sales ticked up in all regions except the Northeast, which saw a sizable 11.3% drop. In the West, where home prices have recently been weakest, pending home sales rose the most, up 4.7% from March. Despite this month’s improvement, contract signings in all four regions lagged behind the year-ago pace by roughly 17% to 26%.
What Does This Mean for Buyers, Sellers, & the Housing Market:
So far, homebuyer interest has held up reasonably well despite expected economic slowing, as we near the end of the Fed’s tightening cycle and a new wildcard in the U.S. debt ceiling negotiation. With uncertainties looming, potential buyers have a lot to consider. My expectation is that an agreement is reached to end the U.S. debt stalemate, and existing home sales will continue to muddle along, while the new homes market, which is relatively better supplied, will outperform. For homeowners considering a sale, today’s data shows that buyers are still shopping, but the varied regional performance suggests that pricing a home well is important.