Thursday, July 26, 2012

Pending home sales decline in U.S. West region: may be restricted by supply

Pending home sales in the  US rose in April by 8.4 percent, year over year, according to new pending home sales data released today by the National Association of Realtors. According to the press release:

Lawrence Yun, NAR chief economist, said inventory shortages are a factor.  “Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities,” Yun said.  “We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.”

All regions of the country except the West showed gains in pending home sales, year over year.

In the West, pending home sales decreased 1.3 percent from June 2011 to June 2012.  Pending home sales increased 17 percent in the Midwest and also increased in the Northeast and South.

Overall, the numbers are weaker in the West than in the other regions and in the nation as a whole. In Colorado specifically, sales are up in metro Denver and the northern Front Range.  See more.

The graph shows that pending home sales activity has now reached to levels experienced during the final days of the homebuyer tax credits - which here show up as high pending sales numbers during April 2010:

Declines in pending home sales does not necessarily indicate a decline in demand. As NAR points out, pending home sales can be restricted by supply, and we know that supply is limited in the Denver area, if not in other metro areas of Colorado as well.  Other areas of the west may be experiencing similar trends which may be a major factor in the pending homes sales declines across the region.