May 31, 2024 - Economy

Latest housing market blow: Pending home sales gauge plunges

The line chart shows the fluctuating trend of the Pending Home Sales Index from January 2008 to April 2024, with the latest noticeable drop in March 2020 and a steady decline starting from August 2021. The latest value of the index is 72 for April, the lowest in four years.
Data: National Association of Realtors; Chart: Axios Visuals

Pending home sales fell to the lowest level in four years in April — the worst reading since the height of the pandemic lockdown.

Why it matters: Spring homebuying season is looking like a serious slump — it's the second-lowest reading since the National Association of Realtors started tracking the data in 2001.

The big picture: Would-be buyers are turned off by high mortgage rates and record home prices.

  • And it's not just demand: Buyers willing to jump into the market face lackluster supply — existing homeowners don't want to give up low mortgage rates.

By the numbers: An index that tracks existing homes under contract fell nearly 8% last month, according to the NAR.

  • No region was spared, though the Midwest index saw the biggest monthly decline of 9.5% in April.
  • Mortgage rates topped 7% this week, up from 6.8% in early April, Freddie Mac said on Thursday.

What they're saying: "Home prices are hitting record highs, but the pace of gains should decelerate with more supply," Lawrence Yun, the trade group's chief economist, said in a statement.

  • Yun added that interest rate cuts could "improved affordability and more supply," though it's unclear when the Fed will pivot.
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