SAN ANSELMO, CALIFORNIA – NOVEMBER 30: A “sale pending” sign is placed in front of a home for sale on November 30, 2023 in San Anselmo, California. According to a report from the National Association of Realtors, pending home sales fell 1.5 percent in October to their lowest level in 20 years. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan | Getty Images News | fake images
Signed sales contracts for existing homes fell 7.7% in April compared to March, the slowest pace since April 2020, according to the National Association of Realtors.
These so-called pending sales are a forward-looking indicator of sales closed one or two months later. Pending sales were 7.4% lower than April of last year.
Sales were expected to remain stable compared to March.
Because the count is based on signed contracts, it shows how buyers react to mortgage rates in real time. The average 30-year fixed bond rate ended March at around 6.9% and then took off, reaching 7.5% at the end of April, according to Mortgage News Daily.
With home prices still rising and supply very low, leading to increased competition, that jump in rates had a huge effect on sales.
“The impact of rising interest rates throughout April dampened home buying, even with more inventory on the market,” said Lawrence Yun, NAR chief economist. “But the Fed's planned rate cut later this year should lead to better conditions, with greater affordability and more supply.”
Sales were down in all regions of the country, but fell most sharply in the Midwest and West. The former has some of the most affordable markets in the country and the latter has some of the most expensive.
“The prospect of measurable declines in home prices appears minimal. The few markets that experience price declines will be viewed as second-chance opportunities for buyers to enter the market if those regions continue to add jobs,” Yun added.
Perhaps reacting to the slow pace of sales in April, the share of sellers who reduced prices in May reached 6.4%, the highest level since 2022, according to a new report from Redfin. The average sales price also fell for the first time in six months.
Active inventory in April was 30% higher than in April 2023, according to Realtor.com, suggesting the summer market could be more active than last year.
“Although inventory and prices are moving in a more favorable direction for buyers, lower mortgage rates will be crucial for both buyers and sellers to return to the market,” said Hannah Jones, senior economic research analyst at Realtor .com.
