Pending Home Sales Slumped 7.7% in April
Key Highlights
- Pending home sales decreased 7.7% in April.
- Contract signings retreated in all regions compared to the previous month and one year ago.
- The Midwest and West experienced the largest monthly declines.
WASHINGTON (May 30, 2024) – Pending home sales in April fell 7.7%, according to the National Association of REALTORS®. All four U.S. regions registered month-over-month and year-over-year decreases.
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," said 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."
Pending Home Sales Regional Breakdown
The Northeast PHSI fell 3.5% from last month to 62.9, a decline of 3.1% from April 2023. The Midwest index dropped 9.5% to 70.7 in April, down 8.7% from one year ago.
The South PHSI lowered 7.6% to 88.6 in April, dropping 8.2% from the prior year. The West index decreased 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," said 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."
About the National Association of REALTORS®
The National Association of REALTORS® is America's largest trade association, representing 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues.
The index is based on a sample that covers about 40% of multiple listing service data each month. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
NOTE: Existing-Home Sales for May will be released June 21. The next Pending Home Sales Index will be released June 27. All release times are 10 a.m. Eastern. View the NAR Statistical News Release Schedule.
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