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Updated: May 25, 2023, 22:05 UTC•1min read
The National Association of Realtors believes that a sizeable increase in housing inventory is needed to boost the market.
Key Insights
- Pending Home Sales were unchanged in April.
- The National Association of Realtors highlighted affordability challenges.
- Markets showed little reaction to the report as traders remained focused on debt ceiling negotiations.
On May 25, the National Association of Realtors released the Pending Home Sales report for April. The report indicated that Pending Homes Slaes were unchanged on a month-over-month basis, compared to analyst consensus of +1%.
On a year-over-year basis, Pending Home Sales declined by 20.3%, which is not surprising as buyers reacted to higher interest rates.
NAR Chief Economist Lawrence Yun commented: “Affordability challenges certainly remain and continue to hold back contract signings, but a sizeable increase in housing inventory will be critical to get more Americans moving.” He also said limited inventory was among the reasons for weak activity.
At this point, it looks that the situation in the housing market will not improve materially until interest rates fall from current levels.
While Pending Home Sales fell short of analyst expectations, markets have mostly ignored the report as traders remained focused on the U.S. debt ceiling drama.
SP500 settled near 4135 as traders waited for additional catalysts. The better-than-expected GDP report did not provide support to stocks as debt ceiling negotiations continued.
U.S. Dollar Index tested new highs above the 104 level as demand for safe-haven assets remained strong.
Treasury yields continued to move higher, which was bearish for gold markets. Currently, the price of gold is trying to settle below the $1950 level.
For a look at all of today’s economic events, check out our economic calendar.
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Recently released data has shown that pending home sales have missed expectations due to a limited inventory. Many potential home buyers are being immediately shut out of the market for a variety of reasons, including a lack of available homes for sale and a diminishing affordability of homes.
The National Association of Realtors reported that pending home sales declined 0.8% in April compared to last year. This marks the fourth consecutive month of year-over-year declines in pending home sales. Economists had expected a slight increase in pending home sales for the month.
The shortage of homes on the market is a major factor in this decline. In April, inventory was down 8.4% from the same month a year ago. This lack of supply has kept many buyers who are looking to enter the housing market from being able to purchase a home. Furthermore, the decreasing affordability of new homes has further dampened sales for potential homes buyers.
It remains to be seen if this trend will continue, but it appears that a combination of inadequate inventory and mounting prices could be continuing to hinder pending home sales. As potential buyers are increasingly unable to buy the homes they want, it’s clear that the market is tightening.
While there may be little that potential homeowners can do to change the limited inventory and diminishing affordability of homes, it is important for sellers to understand the reality of the current market in order to succeed in the market. By working with an experienced real estate agent, sellers will be better prepared to navigate the current market and maximize the return on their property.
