According to a recent report from the National Association of Realtors, pending home sales have finally slowed by only a 1.3% drop in April due to challenging levels of inventory. In comparison, this is 3.3% lower than a year ago and is also the first year over year decline since last December.
Lawrence Yun, NAR chief economist has released a statement that the activity is weakening due to the very limited housing stock that is available.
“Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” he said. “Realtors® are indicating that foot traffic is higher than a year ago, but it’s obviously not translating to more sales.”
He also added, “Prospective buyers are feeling the double whammy this spring of inventory that’s down 9.0 percent from a year ago and price appreciation that’s much faster than any rise they’ve likely seen in their income.”
The forecast does not show much evidence of the inventory challenges subsiding. Homebuilding has not been increasing enough to reach the demand this year while there are not many homeowners listing for sale.
“The unloading of single-family homes purchased by real estate investors during the downturn for rental purposes would also go a long way in helping relieve these inventory shortages,” said Yun. “To date, there are no indications investors are ready to sell. However, they should be mindful of the fact that rental demand will soften as the overall population of young adults starts to shrink in roughly five years.”
Yun predicts existing home sales to be around 5.64 million for 2017 which is up by 3.5% from last year. The national median existing home price is also projected to increase by 5%.
It is clear that the real estate market is being fueled by a good economy with many looking to enter into it and become homeowners. The hurdle remains much to do with the fewer homes available on the market making for a great seller’s market.
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