The National Association of Realtors (NAR) released their pending home sales report for April 2020. The report shows that sales were down month to month 21.8% in April which is the greatest decline since NAR began tracking pending home sales transactions in January 2001. Pending home sales activity were down in all regions for the past month and year over year.
A sale is listed as pending when a contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. NAR uses the Pending Home Sales Index (PHSI), a forward looking indicator based on contract signings saw the index shrink to 69.0 for April. This is a 21.8% drop from the previous month. PHSI index shows a decrease of 33.8% from the same period in 2019. A PHSI level of 100 is equal to the activity level when the Index was first used in 2001.
Lawrence Yun, chief economist for NAR believes that activity will pick up in the coming months. He says “With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases. 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. 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.” NAR refers to a survey showing 34% of realtors being comfortable with completing transactions under social distancing procedures.
Below is a breakdown of how PHSI shrank per region:
Northeast: PHSI sank 48.2% to 42.6 in April. This is 52.6% below numbers from April 2019.
South: The South region saw a decrease of 15.4% to 87.6 in April. This is a 29.6% decrease from April 2019.
Midwest: The Midwest PHSI was at 72.0 for April which is a decrease of 15.9%. The index is down 26.0% from the same period last year.
West: The West saw a reduction of 20.0% for April 2020 to a PHSI of 57.1. The index is down 37.2% from April 2019.
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