Pending home sales cratered again in
April, marking two straight months of declines that exceeded 20 percent. The
National Association of Realtors® (NAR) said its Pending Home Sales Index
(PHSI) fell 21.8  percent to 69.0. The
decline in March was 20.8 percent. The Index is down by 33.8 percent
year-over-year.

This is the largest decline in pending
home sales
number since NAR began tracking the transactions in January 2001. Every major region experienced a drop in both
month-over-month and year-over-year pending home sales transactions.

NAR
Chief Economist Lawrence Yun said he expects that April will be the lowest
point for pending sales and subsequently May will mark the bottom for closed
sales of existing homes.

The
April results were even worse than analysts had expected. Those polled by Econoday
had predicted a decline ranging from 12.0 to 16.4 percent. The consensus was
15.0 percent.

“While coronavirus mitigation
efforts have disrupted contract signings, the real estate industry is ‘hot’ in
affordable price points with the wide prevalence of bidding wars for the
limited inventory,” he said. “In the coming months, buying activity will rise
as states reopen and more consumers feel comfortable about homebuying in the
midst of the social distancing measures
.”

There appears to be a disconnect between
the April PHSI and recent numbers on purchase mortgage applications from the
Mortgage Bankers Association. Those applications have risen every week since
April 17 and have improved over that period by an aggregate of 46 percentage
points.

NAR said that buyers may be growing
more comfortable with buying in the midst of the pandemic. In its most recent
Flash Survey 34 percent of Realtors  reported successfully completing nearly
all aspects of transactions while adhering to social distancing procedures.

“Given the surprising resiliency of
the housing market in the midst of the pandemic, the outlook for the remainder
of the year has been upgraded for both home sales and prices
, with home sales
to decline by only 11 percent in 2020 with the median home price projected to
increase by 4 percent,” Yun said. “In the prior forecast, sales were expected
to fall by 15 percent and there was no increase in home price.”

While pending sales were down in all
four regions compared to March, the declines in the Midwest, South and West
were less severe than those the prior month. In the Northeast, the PHSI sank
48.2 percent to 42.6 in April and was down 52.6 percent on an annual basis. In
the Midwest, pending sales were lower by 15.9 percent at an index of 72.0 last
month and by 26.0 percent year-over-year.

Pending home sales in the South decreased
by 15.4 from March to an index of 87.6. This was a 29.6 percent decline from
April 2019. The index in the West slipped 20.0 percent for the month and 37.2
percent on an annual basis to a reading of 57.1.

The
PHSI is a leading indicator of existing home sales and is based on a large
national sample, typically representing about 20 percent of transactions for
existing-home sales. In developing the model for the Index, it was demonstrated
that the level of monthly sales-contract activity parallels the level of closed
existing-home sales in the following two months. NAR will release existing home
sales results for April on June 22.

An
index of 100 is equal to the average level of contract activity during 2001,
which was the first year to be examined. By coincidence, the volume of
existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which
is considered normal for the current

By Jann Swanson , dated 2020-05-28 10:46:50

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Courtesy of Mortgage News Daily

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