U.S. Pending Home Sales Decline Unexpectedly on Lean Inventory

U.S. pending home sales fell unexpectedly in April for the third time in the last four months, reflecting a lack of affordable properties that continues to restrain the housing market.

The National Association of Realtors’ index of pending home sales decreased 4.4% from the prior month to 106.2, the lowest reading since May of last year, according to data released Thursday. The median estimate in a Bloomberg survey of economists called for the measure to rise 0.4%.

U.S. Pending Home Sales Decline Unexpectedly on Lean Inventory

Elevated asking prices, reflecting the limited supply of homes on the market, are restraining sales. While declining in April, the NAR’s gauge of contract signings on existing properties is still up 53.5% from a year earlier on an unadjusted basis.

That indicates underlying buyer interest that could translate into a pickup in sales once more properties are listed for sale.

“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” Lawrence Yun, chief economist at the NAR, said in a statement. “The upper-end market is still moving sharply as inventory is more plentiful there.”

Yun said he expects supply to improve as early as this fall. Asking prices have surged, prompting some bidding wars and raising questions about risks in the housing market.

Earlier this week, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said during a congressional hearing that “there is a little bit of a bubble” in housing, but that banks have more capital than during the financial crisis. Morgan Stanley CEO James Gorman said it’s not a housing bubble nationally, but there are certainly some suburbs that look very frothy to him.

Read more: Housing’s ‘Little Bit of a Bubble’ Not Worrying Big Banks Yet

All regions but the Midwest posted declines in April contract signings, the NAR’s data showed.

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