In April, pending home sales fell 7.7% with all four U.S. regions registering month-over-month and year-over-year decreases, according to the National Association of Realtors.
The Pending Home Sales Index (PHSI)—a forward-looking indicator of home sales based on contract signings—decreased to 72.3 in April. Year over year, pending transactions were down 7.4%. An index of 100 is equal to the level of contract activity in 2001.
"The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market," says NAR chief economist Lawrence Yun. "But the Federal Reserve's anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply."
A decline of 3.1% from April 2023, the Northeast PHSI fell 3.5% from March to 62.9. The Midwest index dropped 9.5% to 70.7 in April, down 8.7% from one year ago.
The South PHSI dropped 7.6% to 88.6 in April, an 8.2% decrease from the prior year. The West index retreated 8.5% in April to 55.9, down 7.3% from April 2023.
"Home prices are hitting record highs, but the pace of gains should decelerate with more supply," says Yun. "However, the prospect of measurable home price declines appears minimal. The few markets experiencing price declines will be viewed as second-chance opportunities for buyers to enter the market if those regions continue to add jobs."
