After a large gain in March, pending home sales slightly dropped in April.
The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI fell 1.5% from 105.9 in March to 104.3 in April, and was still 2.0% below the level of one year ago, marking the sixteenth straight month of declines on an annualized basis.
Regionally, only the Midwest saw an increase in the PHSI. The PHSI in the Midwest expanded 1.3% in April, while sales in the Northeast, South and West fell 1.8%, 2.5% and 1.8%, respectively. Year-over-year, the PHSI declined in four regions, ranging from 1.5% in the West to 2.4% in the Midwest.
According to the NAR, the mild decline in April suggested the impacts of lower mortgage rates may not yet be fully realized. But on the other hand, mortgage applications and consumer confidence have been steadily increasing. NAR expects sales are likely to increase in coming months.
Moderate home prices and stabilized builder confidence also provide favorable conditions for the housing market. The Case-Shiller U.S. National Home Price Index continued a slow growth pace in March. Meanwhile, builder confidence rose three points to 66 in May, the highest level since October 2018, reflecting solid demand even though affordability concerns persist.