According to the National Association of Realtors (“NAR”), pending home sales in April 2021 were down 4.4% from March 2021, continuing the downward trend of home sale volume. However, April 2021’s pending home sales were 52% higher than April 2020. All this suggests is what we’ve said previously: the housing market is cooling off, rather than crashing. At the end of the day, luxury homes are still selling well, but the median-priced homes are now moving at pre-pandemic levels.
Specifically, every region other than the Midwest (which has an abundance of affordable housing and saw a 3.5% increase in pending home sales) saw a decrease in pending home sales; the Northeast saw a 13% decrease month-over-month.
It’s axiomatic that homes will sell for whatever the market will bear (of course there are a myriad of factors that go into that, but that’s beyond the scope of this article). The slowdown in pending home sales (when the parties have agreed on prices and terms of a sale) simply indicates that housing prices are reaching the maximum that the market will bear, as evidenced by less people entering into agreements for high priced homes. Therefore, we can expect to see housing prices decrease in marginal increments until the market balances itself out. It’s important to understand that this is not a crash, but the market correcting itself.
At the Chernov Team we understand that knowledge is power, and knowledge of how market indicators impact the future prosperity of the market itself is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.