In April, there was no change in the number of agreements for buying previously owned houses. The National Association of Realtors® (NAR) reported that its Pending Home Sales Index (PHSI), a predictive measure of existing home sales, stayed the same as March, at 78.9. Although the index had shown some progress during the initial three months of the year, it has now declined by 20.3 percent compared to the previous year.
NAR’s Chief Economist, Lawrence Yun, attributed the sluggish sales in the typically bustling season of residential real estate to persistent limitations in available inventory. He further emphasized that affordability obstacles are still present and are hindering the signing of contracts. Yun stressed the importance of a substantial rise in housing inventory to encourage more Americans to relocate.
Although three out of the four primary regions experienced an increase in new sales contracts, the substantial decrease in the fourth region offset those gains. In the Northeast, the PHSI dropped by 11.3 percent from March, reaching a value of 59.1, and representing a 21.8 percent decline compared to the previous April. On the other hand, the Midwest’s index showed improvement, rising by 3.6 percent to 78.4, but still reflecting a 21.4 percent annual decrease.
In April, pending sales in the South experienced a marginal increase of 0.1 percent, reaching a value of 99.6, but showed a significant 16.7 percent decline compared to the previous year. On the other hand, the West region saw a 4.7 percent rise, bringing the PHSI to 62.2, although this still marked a substantial 26.0 percent decrease from April 2022.
The Pending Home Sales Index (PHSI) serves as a predictive measure for the housing industry, utilizing data on pending sales of existing homes that are typically concluded within a span of one to two months. The PHSI was established with a benchmark of 100 in 2001, representing the average level of contract activity during that specific year.