Homebuyers are struggling to find homes, despite strong demand for housing. Pending home sales dropped further than expected in April to their third lowest level in the past year. April marks the fourth straight month of annual declines.
Experts blame lackluster home sales on the critical levels of available housing. Most listings are going under contract in less than a month, and multiple offer situations are increasingly common. Additionally, extremely high home prices and rising mortgage rates are putting even more pressure on buyers.
- Pending home sales dropped 1.3% month-over-month and 2.1% year-over-year in April
- Mortgage rates jumped to their highest level in seven years
- Critical levels of housing supply and low affordability has created a challenging environment for buyers
Potential homebuyers out shopping in April may have been spooked by a sharp rise in mortgage interest rates. Pending home sales, which measure signed contracts to buy existing homes, fell a wider-than-expected 1.3 percent compared to March, according to the National Association of Realtors. It was the third lowest level of the past year.
Pending sales were 2.1 percent lower compared to April of 2017 the fourth straight month showing an annual decline. The Realtors point, again, to the continuing supply crisis in housing today.
“Feedback from Realtors, as well as the underlying sales data, reveal that the demand for buying a home is very robust. Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher,” said Lawrence Yun, chief economist for the NAR in a release. “The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels.”
Weakening affordability is going hand-in-hand with short supply, especially on the lower end of the market. As home prices continue to rise, potential buyers have less and less wiggle room in their wallets.
Mortgage rates jumped sharply in April, with the average rate on the popular 30-year fixed hitting its highest level in seven years.
View the original article at CNBC