The National Association of Realtors (NAR) says pending home sales fell by 21.8% from March to April and are 33.8% below that metric from April of last year.
This leading indicator's slump follows last week's report that existing home sales, a trailing indicator, fell 17.8% for the month and 17.2% year over year.
The NAR said in the latest report that, despite two straight months of declines and sales at lows unseen for the past decade, there is reason for optimism.
"While coronavirus mitigation efforts have disrupted contract signings, the real estate industry is 'hot' in affordable price points with the wide prevalence of bidding wars for the limited inventory," NAR chief economist Lawrence Yun said in today's announcement.
"In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures," Yun added.
On the other hand
That said, Yun added, "With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases."
The NAR based its percentage changes on its Pending Home Sales Index, which it defines as a forward-looking indicator of home sales based on contract signings. An index of 100 is equal to contract activity for that month in the year 2001.
The index was at 69 out of 100 for April, the NAR said.
The declines were recorded in all four regions of the country, but the trade group called it "encouraging" that declines were lower in this month's report than the month before in three areas: the Midwest, South, and West.
However, the Northeast Pending Home Sales Index (PHSI) sank 48.2% to 42.6 in April, 52.6% lower than a year ago. In the Midwest, the index of pending home sales dropped 15.9% to 72.0 last month, down 26.0% from April 2019.
In the South, it slipped 15.4% to an index of 87.6, the highest above the national index of 69, but still down 29.6% from this point last year. The index in the West slipped 20.0% in April 2020 to 57.1, down 37.2% from a year ago, the NAR said.
And back to the upper hand
New listings were up from April 2019 in 34 metro areas, the NAR said, including Virginia Beach, Virginia; Sioux Falls, South Dakota; Odessa, Texas; Summerville, Georgia; and Las Cruces, New Mexico.
And, the trade group's most recent Flash Survey showed 34% of Realtors "reported successfully completing nearly all aspects of transactions while adhering to social distancing procedures," touting that as another reason to believe the market is poised to rebound.
"Given the surprising resiliency of the housing market in the midst of the pandemic, the outlook for the remainder of the year has been upgraded for both home sales and prices, with home sales to decline by only 11% in 2020 with the median home price projected to increase by 4%," Yun said. "In the prior forecast, sales were expected to fall by 15% and there was no increase in home price."