Pending Home Sales Drop 4.4% in April

This morning the National Association of Realtors released the April data for their Pending Home Sales Index. Here is an excerpt from the latest press release:

The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, fell 4.4% to 106.2 in April. Year-over-year, signings jumped 51.7% as last year's pandemic-related shutdowns slumped sales to an all-time low. An index of 100 is equal to the level of contract activity in 2001.

"Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes," said Lawrence Yun, NAR's chief economist. "The upper-end market is still moving sharply as inventory is more plentiful there." (more here)

The chart below gives us a snapshot of the index since 2001. The MoM came in at -4.4%, down from a 1.7% decrease last month. Investing.com had forecast an increase of 0.8%.

Over this time frame, the US population has grown by 16.6%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.

The index for the most recent month is currently 18% below its all-time high. The population-adjusted index is 25% off its high.

Pending versus Existing Home Sales

The NAR explains that "because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two." Here is a growth overlay of the two series. The general correlation, as expected, is close. And a close look at the numbers supports the NAR's assessment that their pending sales series is a leading index.