Drop it like it’s hot? Flip it and reverse it? Pending home sales are beginning to sound like hip-hop hits from the early 2000s.
Taking a significant hit in April, pending sales dropped 6.3%, according to the National Association of REALTORS® (NAR). This sharp drop marks a dramatic reversal from the 6.1% gain in March, which had been the largest monthly increase since December 2023.
This latest decline underscores the housing market’s volatility and sensitivity to high rates.
“At this critical stage of the housing market, it is all about mortgage rates,” said NAR Chief Economist Lawrence Yun. “Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring homebuyers back into the housing market.”
Besides climbing mortgage rates, widespread economic uncertainty may be behind prospective homebuyers’ hesitations, said Realtor.com® Senior Economic Research Analyst Hannah Jones.
“Concerns of a recession are rising, which can have an impact on home-buying decisions as households brace for potential financial strain. Consumer confidence took a hit in April as the ongoing trade war hit a fever pitch early in the month and sweeping tariffs were announced,” Jones said in a statement. “Though the administration took a step back from many of the most severe measures, concerns remain about their potential impact on prices, including for newly built homes.”
National decline
All four U.S. regions experienced month-over-month declines, signaling widespread weakness across the nation. The Midwest experienced an increase in year-over-year contract signings.
Pending sales in the Northeast declined 0.6% from last month to 62.1, down 3% from April 2024. The Midwest dropped 5% to 73.5 in April, up 2.2% from the previous year. The South sank 7.7% to 85.9 in April, down 3% year-over-year. The West saw an 8.9% drop to 53.3, down 6.5% from a year ago.
“Homebuyers have a better chance to purchase homes in affordable regions such as the Midwest, where the typical home price is $313,000—25% below the national median home price,” added Yun. “Moreover, with housing inventory levels reaching five-year highs, homebuyers in nearly every region of the country are in a better position to negotiate more favorable terms.”
