© Reuters. A “For Rent, For Sale” sign is seen outside of a home in Washington, U.S., July 7, 2022. REUTERS/Sarah Silbiger
WASHINGTON (Reuters) – Contracts to buy U.S. previously owned homes were unchanged in April amid tight inventory, which could delay a recovery in the housing market.
The National Association of Realtors (NAR) said on Thursday that the unchanged reading of 78.9 in its Pending Home Sales Index, based on signed contracts, last month followed a 5.2% drop in March. Economists polled by Reuters had forecast pending sales, which become sales after a month or two, rebounding 1.0%.
Pending home sales decreased 20.3% in April on a year-on-year basis.
A perennial shortage of homes on the market is frustrating would be buyers eager to take advantage of dips in mortgage rates. The inventory of existing homes remains 44% below its pre-pandemic levels, according to data from the NAR, resulting in price rises in some parts of country, multiple offers and homes being sold above list price.
While builders are stepping up construction, shortages of transformers and other materials remain a challenge. Tighter credit conditions could also make it harder for them to finance new housing projects.
“Not all buying interests are being completed due to limited inventory,” said NAR Chief Economist Lawrence Yun. “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.”
The housing market has taken the biggest hit from the Federal Reserve’s fastest monetary policy tightening campaign since the 1980s to tame inflation.
The average rate on the popular 30-year fixed mortgage has been hovering in the middle of its 6.09% and 6.73% range this year, after peaking at 7.03% in late 2022, according to data from mortgage finance agency Freddie Mac (OTC:).
Contract signings tumbled 11.3% in the Northeast, but increased 3.6% in the Midwest. They rose 4.7% in the West and gained 0.1% in the South.