Pending home sales fell 7.7% in April amid rising interest rates, according to new data released Thursday.
Recent numbers from the National Association of Realtors (NAR) found that home sales are down in all four regions of the US. The group pointed to a drop in the Pending Home Sales Index (PHSI), which it described as its “forward-looking indicator of home sales based on contract signings.”
Lawrence Yun, chief economist at NAR, cited rising interest rates as a key factor in “decreasing home purchases, even with more inventory on the market.”
“But the Federal Reserve’s anticipated rate cut later this year should lead to better conditions, with better affordability and more supply,” Yun added in a statement on Thursday.
The numbers come shortly after the S&P CoreLogic Case-Shiller national home price index, released last month, found that home prices rose 6.4% in February compared with a year earlier.
A month before that, house prices registered a 6% annual increase in January, marking the fastest annual growth in more than a year.
“Home prices are reaching record levels, but the pace of gains is expected to slow with more supply,” Yun said on Thursday. “However, the prospect of measurable declines in house prices appears minimal.”
In its latest report, the NAR said the Northeast’s PHSI fell 3.5 percent in April, reaching 62.9, while the Midwest’s index reached 70.7 last month, marking a drop of 9.5 percent. cent. The West’s index fell 8.5% during the same period, reaching 55.9, while the South’s PHSI reached 88.6, or fell 7.6%.
Yun said on Thursday that markets that see price declines “will be seen as second-chance opportunities for buyers to enter the market if these regions continue to create jobs.”
Reacting to the recent data, CoreLogic chief economist Dr Selma Hepp emphasized what she described as “an important shift in home buying sentiment”.
“This time last year, potential homebuyers were in the mindset to buy homes despite high rates and a lack of homes for sale. With little expectation of a fall in interest rates in the short term, the mentality today is to wait and see,” said Hepp.
“Households are making headlines and seeing rising insurance costs and disruptions from climate change contributing to affordability challenges, and this is also having a negative impact on sentiment,” Hepp added.
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