Contracts to buy previously owned homes in the United States fell significantly in April, as higher mortgage rates and economic uncertainty dampened buyer demand.
The National Association of Realtors (NAR) reported that its Pending Home Sales Index declined 6.3% to 71.3 last month, marking the largest monthly drop since June 2022 and the third lowest reading in the index’s history.
All four U.S. regions saw month-over-month declines in pending home sales. Year-over-year, contract signings increased slightly in the Midwest but fell in the Northeast, South, and West, with the West experiencing the steepest drop. The index’s year-over-year decline was 2.5% compared to April 2024.
NAR Chief Economist Lawrence Yun emphasized the impact of mortgage rates on the housing market, stating, “At this critical stage of the housing market, it is all about mortgage rates.”
He noted that despite increased housing inventory, sales have not risen, and lower mortgage rates are crucial to attract buyers back into the market.
Mortgage finance data showed the average rate on a 30-year fixed mortgage rose to about 6.81% in April from roughly 6.65% in March, contributing to the slowdown in contract signings. Meanwhile, the average sales price of a new home in April was $518,400, up 3.7% from March and 3.6% higher than April 2024, indicating that affordability remains a challenge.
Yun also highlighted that buyers have better opportunities in more affordable regions like the Midwest, where the typical home price is around $313,000, about 25% below the national median. Additionally, housing inventory levels have reached five-year highs, giving buyers more negotiating power.
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