After falling for the first time since November 2022 in March, pending home sales remained unchanged in April, according to data released Thursday by the National Association of Realtors (NAR).
Year over year, pending home sales were down 20.3%, an improvement on the 23.3% annual drop recorded in March.
“The housing market looks different than it does during a typical spring, when the market is usually in full gear,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement. “Elevated mortgage rates and economic uncertainty, along with still-low inventory, means that new pending sales were down more than 20% from a year ago, and were lower even compared to 2019 levels.”
The NAR’s Pending Home Sales Index maintained its reading of 78.9 in April. An index of 100 is equal to the level of contract activity in 2001.
“Not all buying interests are being completed due to limited inventory,” Lawrence Yun, the chief economist of NAR, said in a statement. “Affordability challenges certainly remain and continue to hold back contract signings, but a sizeable increase in housing inventory will be critical to get more Americans moving.”
Regionally, the Midwest (78.4), South (99.6), and West (62.2) all recorded pending home sales increases in April, with the West recording the largest increase at 4.7%. The Northeast (59.1) was the only region to post a monthly decrease, falling 11.3% in April. On a yearly basis, the West posted the largest decrease at 26.0%.
“Minor monthly variations in regional activity are typical,” said Yun. “However, cumulative results over many years clearly point towards a much greater number of home sales in the South. The South’s pending home sales activity is similar to that of 2001, but the Midwest’s activity has decreased by 22% in that same period, and the Northeast and West regions are both about 40% lower than they were in 2001.”
Looking ahead, Sturtevant believes the real estate industry will be keeping a keen eye on some of the ongoing discussions in the nation’s capital.
“A big wildcard in the housing market right now is the debt ceiling debate. While it would be unprecedented, if an agreement is not reached and the government defaults on its debt, mortgage rates likely will spike, which could significantly reduce homebuyer demand. Even the extended negotiations are beginning to rattle markets and bring down consumer confidence,” Sturtevant said. “Between the debt limit impasse and the next meeting of the Federal Reserve, all eyes will be on Washington. The strength of the summer housing market could be dictated by the actions that the government and the central bank take—or fail to take—over the next two weeks.”