Contract signings fell 7.7 percent between March and April to a score of 72.3 on the Pending Home Sales Index last month, according to data released Thursday by the National Association of Realtors.

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Pending home sales fell in April, as increasing mortgage rates put a damper on what is typically one of the busiest homebuying months of the year, according to data released Thursday by the National Association of Realtors.

Contract signings fell 7.7 percent between March and April, to a score of 72.3 on the Pending Home Sales Index — the lowest level recorded since April 2020 — as mortgage rates rose above 7 percent, according to the data. The score fell 7.4 percent from April 2023, the data shows.

A home sale is listed as pending when the contract has been signed but the transaction has not yet closed. Pending home sales are considered a leading indicator of where the housing market is headed in the weeks to come.

NAR economists attributed the drop to still-lofty mortgage rates but said an anticipated rate cut later this year could lead to better conditions.

“The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market,” NAR Chief Economist Lawrence Yun said in a statement. “But the Federal Reserve’s anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply.”

Pending sales fell in every major United States region, with the Midwest and West experiencing the largest monthly declines at 9.5 and 8.5 percent respectively, with annual decreases of 8.7 and 7.3 percent respectively.

Pending sales in the South fell 7.6 percent from March to a measure of 88.6 on the index, down 8.2 percent from a year ago, while pending sales in the Northeast fell 3.5 percent from the previous month and 3.1 percent from a year ago to a measure of 62.9.

“Home prices are hitting record highs, but the pace of gains should decelerate with more supply,” said Yun. “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.”=

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