Pending home sales unexpectedly drop, adding to market woes
Contract signings to purchase previously owned homes unexpectedly fell in April, adding to signs the housing market is struggling to regain momentum.
The index of pending home sales declined 1.5% from the prior month, missing all economist estimates, after a 3.9% increase in March, according to data Thursday from the National Association of Realtors in Washington. The measure was up 0.4% from a year earlier on an unadjusted basis, the first positive reading in a year, suggesting some stabilization.
The monthly decline adds to signs of a soft housing market amid an economy that may be losing some steam. Previous data showed sales of both new and existing homes fell in April while single-family housing permits dropped to the lowest level in almost two years.
At the same time, low mortgage rates, more affordable properties and rising wages should support demand, and contract activity remains higher than in late 2018.
Pending home sales are often looked to as a leading indicator of existing home purchases and a measure of the health of the housing market in the coming months.
"Though the latest monthly figure shows a mild decline in contract signings, mortgage applications and consumer confidence have been steadily rising," NAR Chief Economist Lawrence Yun said in a statement. "It's inevitable for sales to turn higher in a few months."
Contracts decreased from the prior month in three of four regions, led by a 2.5% drop in the South. The Midwest was the only area to record a gain, at 1.3%.
Forecasts for monthly pending home sales in a Bloomberg survey of economists ranged from a 1% drop to a 1.6% gain.