Buyers appear to be continuing to dip their toes in the market at a modest rate, according to the latest data from the National Association of Realtors® (NAR). While pending activity is less than the hoped-for spring boom, it is still historically better despite consistent market and economic challenges.
NAR’s April Pending Home Sales report saw a 1.4% increase in sales month-over-month, slightly down from the 1.5% rise in March, but the third consecutive month of growth this year.
“Cautious optimism” is what NAR Chief Economist Lawrence Yun said buyers are approaching the market with, “despite increasing economic uncertainty and a slight rise in mortgage rates.”
“Demand will easily be even higher once mortgage rates retreat to the levels they were at earlier this year,” he continued.
Year-over-year, pending home sales are up 3.2%, a “clear indication that the market is finding more balance during this spring season” compared to last year’s, according to Realtor.com® Senior Economist Hannah Jones.
“Taken together, the April data reflects a seller cohort willing to engage and doing so with more realistic pricing, a meaningful contrast to last spring’s standoff,” she continued.
Regionally, the Midwest and the West had a strong April as sales rose both month-over-month (3% and 0.4%, respectively) and year-over-year (2.7% and 3.8%, respectively) for the two regions.
The Northeast and the South, however, were more mixed. Sales in the Northeast were up 6.6% month-over-month, but down 0.6% year-over-year, while sales in the South were down 0.7% month-over-month, but up 4.7% year-over-year.
The top 10 most notable year-over-year gains in pending sales across the 50 largest metro areas were generally spread across the regions, with the majority (six) in the South:
- Boston, Massachusetts (+10.3%)
- Miami, Florida (+9.4%)
- Oklahoma City, Oklahoma (+8.6%)
- Milwaukee, Wisconsin (+7.4%)
- Virginia Beach, Virginia (+7.2%)
- Raleigh, North Carolina (+5.7%)
- Dallas, Texas (+5.5%)
- Washington, D.C. (+5.4%)
- Columbus, Ohio (+5.4%)
- Charlotte, North Carolina (+5.1%)
Looking forward, Yun noted that inventory—while it has been increasing steadily as of late—still needs “meaningful” growth, or “home price growth could outpace wage growth and further erode the homeownership rate.”
“All efforts need to be focused on boosting housing supply,” he continued.
The potential inflation-contagion, as identified in the latest Consumer Price Index’s leap to 3.8% annual inflation, is also under close watch by housing economists and the industry at large.
“Higher inflation generally puts upward pressure on mortgage rates, which have already started drifting back above 6.3% in early May,” explained Jones. “Beyond rates, inflation running ahead of wage growth means household budgets are being squeezed, a dynamic that could dampen buyer confidence heading into the traditionally active summer months.”
