Homebuyers backed away in April as high mortgage rates and soaring home prices led to the biggest drop in pending sales since late 2022. With borrowing costs still near 7%, many Americans are simply priced out of the market.
Key Facts:
- Pending home sales dropped 6.3% in April, the largest decline since September 2022.
- The index of contract signings fell to 71.3, below all Bloomberg economist estimates.
- The West saw an 8.9% drop in pending sales—the sharpest regional decline.
- Sales in the South, the largest home-selling region, fell 7.7%.
- NAR Chief Economist Lawrence Yun said the market hinges on mortgage rates, which remain near 7%.
The Rest of The Story:
The National Association of Realtors (NAR) reported that pending sales of existing homes dropped sharply in April, indicating ongoing trouble in the resale market.
The 6.3% decline beat even the most pessimistic forecasts, with all major regions except the Northeast showing significant downturns.
In the West and South—regions that had seen migration surges during the pandemic—buyers are now pulling back hard.
Despite a modest increase in available listings, buyers are hesitating.
Some homeowners are listing again, but others are holding out, waiting for mortgage rates to come down.
NAR’s Lawrence Yun emphasized that “lower mortgage rates are essential” to reactivating demand, as current levels around 7% have become a significant hurdle.
Canceled deals are also climbing.
In the three months through April, 7% of existing-home sales were canceled, marking the highest rate since January.
And while there were contract signing increases earlier in the year, those haven’t translated into completed sales—indicating a fragile market outlook.
Commentary:
The housing market remains one of the most serious long-term challenges facing American families.
The pandemic fundamentally reshaped housing demand by enabling millions to move away from high-cost urban centers to more affordable regions in the South and Midwest.
That shift drove prices up sharply in previously lower-cost areas, eroding the very affordability that attracted buyers in the first place.
Then came inflation.
The Federal Reserve’s interest rate hikes to control it sent mortgage rates soaring.
While home prices haven’t come down significantly, borrowing costs have risen, creating a double-bind for would-be buyers.
Wage growth hasn’t kept up, and the math just doesn’t work for many families anymore.
The latest numbers show that to afford a typical U.S. home, a household now needs an income of $118,530.
That’s more than 50% above the median household income.
For middle-class Americans, that puts the dream of homeownership further out of reach than it’s been in decades.
Meanwhile, rent prices have surged, making it harder for people to save up for a down payment.
Instead of building equity, many Americans are stuck renting, often spending more than a third of their income on housing.
That creates a vicious cycle: no savings, no buying power, and no path to owning a home.
Although inventory is improving, it won’t solve the problem alone.
Buyers need rates to come down, prices to soften, or wages to rise significantly—and none of those are happening fast enough.
Until then, the so-called recovery in housing will remain fragile, with more canceled deals and fewer first-time buyers entering the market.
The Bottom Line:
Pending home sales dropped sharply in April, signaling a weak spring season for real estate.
High mortgage rates and stubbornly high prices are discouraging buyers.
Even as inventory improves, affordability remains out of reach for millions of Americans.
Unless mortgage rates come down significantly or incomes rise, the housing market will stay sluggish—putting the American dream of homeownership on hold for many.
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