According to the National Association of Realtors reportings, pending home sales have finally taken a slight 1.3% dip in April due to low levels of inventory. By comparison, this is 3.3% lower than last year and is also the first year over year slow down since last December.
Lawrence Yun, NAR chief economist has indicated that the activity is weakening due to the very limited housing stock that is available. “Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” he said. “Realtors® are indicating that foot traffic is higher than a year ago, but it’s obviously not translating to more sales.”
He also shared, “Prospective buyers are feeling the double whammy this spring of inventory that’s down 9.0 percent from a year ago and price appreciation that’s much faster than any rise they’ve likely seen in their income.”
The projected forecast does not show much evidence of the inventory situation changing. Homebuilding activity has not increased enough to meet the demand while there are not many homeowners listing for sale.
“The unloading of single-family homes purchased by real estate investors during the downturn for rental purposes would also go a long way in helping relieve these inventory shortages,” said Yun. “To date, there are no indications investors are ready to sell. However, they should be mindful of the fact that rental demand will soften as the overall population of young adults starts to shrink in roughly five years.”
Yun predicts that existing home sales will be around 5.64 million this year which is up by 3.5% from last year. The national median existing home price is projected to increase by 5%.
It is certain that the real estate market is being powered by a healthy economy with many looking to jump into it and become homeowners. The difficulty remains much to do with the limited number of homes available on the market making for still a great seller’s market.