US pending home sales fall unexpectedly in April

A lead indicator for home sales Stateside surprised to the downside amid stretched levels of affordability, but economists were sanguine that new cycle highs would be established over the next few months.

The National Association of Realtors' index for pending home sales declined by 1.3% month-on-month in April.

That was considerably worse than economists' expectations for an increase of 1.0% and followed downwards revisions to data for the prior month.

"Prospective buyers are feeling the double whammy this spring of inventory that's down 9.0% from a year ago and price appreciation that's much faster than any rise they've likely seen in their income," said Lawrence Yun, chief economist at NAR.

Yun expected the "astoundingly" low levels of supply to persist due to a lack of homebuilding and too few owners listing their properties for sale.

Commenting on the data, Ian Shepherdson, chief economist at Pantheon Macroeconomics said: "over the next few months, we remain reasonably confident that both pending and actual home sales will rise, perhaps hitting new cycle highs. More immediately, though, the April pending sales index suggests that existing home sales will fall in May, though note that they have run higher than implied by pending sales in recent months."

On a longer-term view, Yun warned that owners who had bought to let during the crisis should he mindful that in five years' time the number of young adults was expected to shrink.

In comparison to a year ago, pending home sales fell 3.3%.