Pending home sales hit lowest level since pandemic began in April | Wilnesh News

Signed sales contracts for existing homes fell 7.7% in April from 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 that will close one to two months later. Pending sales fell 7.4% from April last year.

Sales are expected to be flat compared with March.

Because the count is based on signed contracts, it shows buyers’ immediate reaction to mortgage rates. According to Mortgage News Daily, the average interest rate on a 30-year fixed mortgage was about 6.9% at the end of March and then began to surge, reaching 7.5% by the end of April.

Rising house prices are having a huge impact on sales as house prices are still climbing and supply is very low, leading to increased competition.

“The impact of rising interest rates throughout April dampened home purchases, despite rising inventory on the market,” said NAR Chief Economist Lawrence Yun. “But the Fed’s expected rate cuts later this year should lead to better conditions.” , improving affordability and increasing supply.”

Sales fell in every region of the country, but the declines were most severe in the Midwest and West. The former has some of the cheapest markets in the country and the latter has some of the most expensive.

“The prospects for measurable price declines appear slim. If these areas continue to add jobs, the few markets that experience price declines will be viewed as a second chance for buyers to enter the market,” Yun added.

Perhaps in response to the slow pace of sales in April, the proportion of sellers who lowered their prices reached 6.4% in May, the highest level since 2022, according to a new report from Redfin. The median asking 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 may be more active than last year.

“While inventory and prices are moving in a direction more favorable to buyers, lower mortgage rates are critical to getting buyers and sellers back into the market,” said Hannah Jones, senior economic research analyst at Realtor.com.