US pending home sales plunged in April but an overall upward trend remained firmly in place amid a slowly recovering housing market, an industry group said Wednesday.
The National Association of Realtors said its index of pending home sales, or contracts signed but not closed, dived 5.5 percent to 95.5 in April, from a downwardly revised 101.1 in March. An index level of 100 generally indicates a healthy pending home sales pace.
The decline snapped three straight months of solid gains but nevertheless pending home sales were notably higher in April -- by 14.4 percent -- than a year ago.
NAR chief economist Lawrence Yun said the one-month setback had not derailed the fundamentally improving housing market conditions.
"Home contract activity has been above year-ago levels now for 12 consecutive months. The housing recovery momentum continues," he said.
Ian Shepherdson, chief US economist at High Frequency Economics, pointed out that the average level of the index in March and April, which helps to smooth the impact of Easter seasonal adjustment distortions, was 1.1 percent higher than the January-February average.
"The April reading looks to us like a lot of noise and not much signal. A repeat performance in May would be a different story, but it would also be a big surprise," Shepherdson said.
The US housing market is still bottoming out six years after a price bubble burst, stymieing the economy's recovery from a deep 2008-2009 recession.
Despite mortgage rates at record lows, a high 8.1 percent unemployment rate, tightened lending conditions and falling home prices have kept many would-be buyers on the sidelines.