Yahoo Finance April Sees Largest Drop In Pending Home Sales Since 2021
Pending home sales in April slid 7.7%, marking the largest decline in three years, according to a report issued by the National Association of Realtors (NAR).
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, dropped to 72.3, its lowest level since the onset of the COVID-19 pandemic in April 2020. The NAR said all four U.S. regions saw month-over-month and year-over-year decreases, with the Midwest and West experiencing the sharpest declines.
According to NAR Chief Economist Lawrence Yun, the impact of escalating interest rates throughout April "dampened" home buying despite increased inventory in the market.
Regional Breakdown of Pending Home Sales
In the Northeast, the PHSI fell 3.5% from March to 62.9, a decline of 3.1% from April 2023. The Midwest saw the largest drop, with the index plunging 9.5% to 70.7, down 8.7% from a year ago.
Don't Miss:
A new fund backed by Jeff Bezos offers a 7-9% target yield with monthly dividends. Here’s how you can invest today.
Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." These high-yield real estate notes that pay 7.5% – 9% make earning passive income easier than ever.
The South saw a 7.6% decrease, bringing its index to 88.6, 8.2% lower than the previous year. The West also recorded a drop, with the index falling 8.5% to 55.9, down 7.3% from April 2023.
"Home prices are hitting record highs, but the pace of gains should decelerate with more supply," Yun said in the report. "However, the prospect of measurable home price declines appears minimal. The few markets experiencing price declines will be viewed as second-chance opportunities for buyers to enter the market if those regions continue to add jobs."
The rise in interest rates, which hovered above 7% in April, has been the chief factor in dampening homebuyer activity, the NAR said. High rates and ongoing high home prices and low supply have created a challenging market environment. Many buyers have been sidelined due to increased competition and higher mortgage payments.
Trending: Warren Buffett flipped his neighbor's $67,000 life savings into a $50 million fortune — How much is that worth today?
Sellers, many of whom have seen their homes stay on the market for too long, have shifted to cutting prices to entice potential buyers. The share of home sellers slashing prices in May was at the highest level since 2022, while active inventory in April was 30% higher than in the same month last year, indicating a potential shift toward a more buyer-friendly market in the coming months.
"The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market," Yun said. "But the Federal Reserve’s anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply."
Since March 2020, the Fed has increased interest rates by 5.25 percentage points to bring down inflation.
Although rates have been stable since last July, initial predictions for the year suggested up to three rate cuts of 0.25 percentage points each. However, higher-than-anticipated inflation early in the year has led the Fed to reconsider.
Currently, experts suggest there will be two rate cuts this year.
Despite current challenges, the housing market could see a more active summer season if mortgage rates decrease and inventory levels continue to rise, providing a more favorable environment for prospective homebuyers.
Keep Reading:
Elon Musk and Jeff Bezos are bullish on one city that could dethrone New York and become the new financial capital of the US. Investing in its booming real estate market has never been more accessible.
Become a real estate investor today — How to start small by mirroring BlackRock’s big move.
"ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now!
Get the latest stock analysis from Benzinga?
This article April Sees Largest Drop In Pending Home Sales Since 2021 originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
