WASHINGTON (Reuters) – Existing U.S. home purchase contracts were unchanged in April amid tight inventories that could delay the housing market’s recovery.
The National Association of Realtors (NAR) on Thursday posted an unchanged monthly reading of 78.9 in its pending Home Sales Index based on signed contracts following a 5.2% drop in March.
Economists polled by Reuters had expected pending transactions, which translate into sales after a month or two, to rise 1.0%.
Home sales declined 20.3% in April on a year-on-year basis.
A perennial shortage of homes on the market is frustrating potential buyers looking to take advantage of falling mortgage rates. Existing home inventory remains 44% below pre-pandemic levels, according to NAR data, leading to price hikes in some parts of the country, more offers and homes selling above asking price.
Although builders are ramping up construction, shortage of transformers and other materials remains a problem. Tightening credit conditions could also make it more difficult to put together new real projects.
“Not all commodity purchases are completed due to limited inventory,” said NAR Chief Financial Officer Lawrence Yun. “Incentives certainly remain challenging and will continue to hold back contract signings, but significant growth in the housing inventory will be critical in getting more Americans to move.”
The housing market took the biggest shot from the Federal Reserve’s fastest tightening campaign since the 1980s to rein in inflation.
Contract signings fell 11.3% in the East, but rose 3.6% in the Midwest. They rose 4.7% in the West and gained 0.1% in the South.