The National Association of Realtors (NAR) released the Pending Home Sales Index Report (PHSI) for April 2023, revealing a combination of outcomes. The report indicated that pending home sales remained stagnant in April compared to March, and experienced a decline when compared to the previous year, 2022.

Despite the national pending home sales remaining unchanged from March, there were variations across the four major geographic regions in the country. Three of these regions experienced an uptick in pending home sales, with the Northeastern region being the exception, as it reported a decline in sales.

In April, the Pending Home Sales Index (PHSI), which serves as a predictive measure for home sales based on contract signings, held steady at 78.9, showing no change compared to the previous month. However, there was a significant year-over-year decrease of 20.3% in pending transactions. It’s worth noting that the Index is set at a baseline level of 100, representing the market activity level in 2001.

NAR Chief Economist Lawrence Yun commented that limited inventory is causing incomplete fulfillment of buying interests. He highlighted that affordability challenges persist, hindering contract signings. Yun emphasized the importance of a substantial increase in housing inventory to encourage more Americans to initiate moves.

Yun highlighted the typical occurrence of minor monthly fluctuations in regional activity. However, he emphasized that the cumulative data over the years distinctly indicates a significant rise in home sales in the South region. Comparatively, the Midwest experienced a decline of 22% in pending home sales activity during the same period. Moreover, both the Northeast and West regions witnessed a substantial drop of approximately 40% compared to their 2001 levels. Yun’s observations shed light on the contrasting trends across different regions in terms of their housing market performance.

According to Deputy Chief Economist Odeta Kushi of First American Financial Corporation, the spring home-buying season has had a sluggish start based on the Pending Home Sales Index (PHSI) report. Kushi noted that pending-home sales in April showed no change compared to the previous month. This is concerning as historically, approximately 36% of annual existing-home sales occur between March and June.

Kushi highlighted that affordability constraints have significantly impacted the market compared to a year ago. Higher interest rates have kept existing homeowners reluctant to sell, resulting in limited inventory. The volume of mortgage applications, which typically indicates home sales, has remained mostly stagnant since February, with May also showing a slow trend.