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Pending Home Sales Reach Four-Year Low in April
Pending home sales in April fell 7.7% from the previous month, the National Association of Realtors said Thursday. All four U.S. regions registered month-over-month and year-over-year decreases, with the West and Midwest seeing the sharpest declines.
The NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, decreased to 72.3 in April, the lowest level since the start of the pandemic four years ago. Year over year, pending transactions were down 7.4%. An index of 100 is equal to the level of contract activity in 2001.
The Northeast PHSI fell 3.5% from last month to 62.9, a Y-O-Y decline of 3.1%. The Midwest index dropped 9.5% to 70.7 in April, down 8.7% from a year ago. The South PHSI lowered 7.6% to 88.6 in April, dropping 8.2% Y-O-Y. The West index decreased 8.5% in April to 55.9, down 7.3% from April 2023.
CNBC’s Diana Olick reported that since the count is based on signed contracts, it shows how buyers are reacting to mortgage rates in real time. The average rate on the 30-year fixed mortgage ended March at around 6.9% and then rose to 7.5% by the end of April. “With home prices still climbing and supply very low, leading to increased competition, that jump in rates had a huge effect on sales,” Olick wrote..
“The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market,” said Lawrence Yun, chief economist for the NAR. “But the Federal Reserve’s anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply.”
- ◦Financing
- ◦Economy
