Pending Home Sales Decline in April

(Illustration: Mike Sorohan. Thumbnail illustration: National Association of Realtors)

Pending home sales plunged 6.3% in April, the National Association of Realtors reported Thursday.

All four U.S. regions experienced month-over-month losses in transactions. Year-over-year, contract signings rose in the Midwest but descended in the Northeast, South and West, but the West suffered the greatest loss.

The Pending Home Sales Index–a forward-looking indicator of home sales based on contract signings–fell 6.3% in April to 71.3. Year-over-year, pending transactions retracted by 2.5%. (An index of 100 is equal to the level of contract activity in 2001.)

NAR Chief Economist Lawrence Yun noted the importance of mortgage rates in the housing market. “Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market,” he said.

First American Deputy Chief Economist Odeta Kushi called the drop in pending home sales a “nosedive” and the steepest month-over-month drop since September 2022. “Adding to the woes, economic uncertainty continues to keep potential buyers on the sidelines,” she noted. “The pending home sales data continues to point to a frozen housing market, with transaction activity bouncing along the bottom.”

Kushi said elevated mortgage rates and economic uncertainty are both headwinds for the housing market. “However, rising inventory, which puts downward pressure on prices and allows incomes to catch up, serves as a tailwind,” she added.