Pending home sales drop 1.3% in April as spring housing market shows weakness

• The spring housing market continues to be plagued by a lack of homes for sale
• Home shoppers signed 1.3 percent fewer contracts to buy existing homes in April compared with March
• That drop comes after a larger-than-expected drop in closed home sales in April

Home buyers pull back again in April, signing fewer contracts

The spring housing market continues to be plagued by a lack of homes for sale. Home shoppers signed 1.3 percent fewer contracts to buy existing homes in April compared with March, according to a monthly index from the National Association of Realtors. March's reading was also revised down. The index is 3.3 percent lower than April of 2016.

"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," said Lawrence Yun, chief economist for the Realtors, adding that foot traffic is higher than a year ago.

The drop comes after a larger-than-expected drop in closed home sales in April. More sellers listed their homes in April, but the number of listings was still 9 percent lower than a year ago. Tight supply continues to put upward pressure on home prices, which are now rising at three times the rate of incomes.

We know two things heading into the summer selling season. One, home prices continue to leap forward. Two, homebuyers continue to jump into the market.

Nela Richardson

chief economist, Redfin

"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."

Weaker sales are not due to a lack of potential buyers, especially this year, as millennials age into their home-buying years and confidence in the U.S. economy improves. Home buyer demand surged in April, according to Redfin, a real estate brokerage. The number of clients requesting home tours jumped 12 percent.

"We know two things heading into the summer selling season. One, home prices continue to leap forward. Two, homebuyers continue to jump into the market," said Redfin chief economist Nela Richardson. "A pop of new listings only encourages more homebuyers to barge their way into this crowded and competitive, low-inventory market in order to take advantage of still-low mortgage rates."

Regionally, pending home sales in the Northeast decreased 1.7 percent for the month and are 0.6 percent below a year ago. In the Midwest, the index fell 4.7 percent for the month and 6.1 compared to a year ago. In the South, sales fell 2.7 for the month and are 2.3 percent below last April. The index in the West rose 5.8 percent in April but is still 4.2 percent below a year ago.