The Housing Headline
Home sales activity plunged in April, but U.S. home sale prices continue to climb.
The News Behind The Housing Headline
According to the National Association of REALTORS®, monthly U.S. home sales activity dropped twenty-two percent in April. The reading marks the largest one-month drop in contract activity in ten years, and the lowest monthly reading since the real estate trade group started tracking such data in 2001.
Home sales activity is down 38 percent since the start of the recession in February.
The sales activity data comes from the Pending Home Sales Index, a monthly research report from the National Association of REALTORS® which tallies new sales contracts written between home buyers and home sellers.
The Pending Home Sales Index is a forward-looking housing market indicator; it predicts future home sales. Within two months of signing a contract, the report’s methodology explains, 80 percent of buyers close on their new homes and the majority of the rest close within months three and four.
The April Pending Home Sales Index reading is its lowest in recorded history. Meanwhile, the National Association of REALTORS® also reports that U.S. home values hit their highest levels of all-time in April.
Why This Housing News Matters To You
COVID-19 and national lockdown orders slowed the pace of home sales activity in March and April.
At the current pace at which buyers are buying homes, fewer than 4 million homes will be purchased this year and sales activity will return to its lowest levels since the Great Recession.
However, just because sales are slower, that doesn’t mean homes will be a bargain.
Buyers should not expect home prices to drop during the summer and fall season. Values only drop when sellers outnumber buyers in the market. Right now, the opposite is true.
There are more home buyers than home sellers, and homes are selling quickly.
- 20 percent fewer homes were available for purchase in April versus a year ago
- 56 percent of homes sold in less than a month in April
- The typical home sold in 27 days in April – two days faster from March
These statistics suggest that U.S. housing is healthy, and operating at a slower pace as compared to the last few years.
Don’t use the Pending Home Sales Index to try to time the housing market, and don’t let it fool you into thinking that home prices are about to drop. This recession isn’t a repeat of 2008 when sellers outnumbered buyers.
Home sales are down because buyers and sellers pulled back. Market participation is less. Homes for sale are scarce. Sales still happen, however. And, when buyers are ready to find a home, they’re finding that finding a home is a challenge.
Home prices are higher nationwide.
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Home buyers snatched up properties for sale in May as housing made its v-shaped recovery.