Even with more inventory entering the market, homebuyers are struggling with elevated mortgage rates, NAR Chief Economist Lawrence Yun said, leading to fewer signed contracts.
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Pending home sales plummeted by 6.3 percent in April, the National Association of Realtors reported on Thursday.
All four major U.S. regions saw a drop in pending sales on a monthly basis. Year over year, the Midwest saw contract signings increase, but the Northeast, South and West regions all saw contract signings drop during that period as homebuyers resisted transacting in an elevated mortgage rate landscape.
The Pending Home Sales Index (PHSI) dropped to 71.3 in April, which was down by 2.5 percent year over year. An index of 100 represents the level of contract activity in 2001.
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“At this critical stage of the housing market, it is all about mortgage rates,” NAR Chief Economist Lawrence Yun said in a statement. “Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring homebuyers back into the housing market.”
The West took the biggest hit on a monthly and annual basis, and was down 8.9 percent from March 2025 to 53.3 and down 6.5 percent year over year.
The South PHSI declined 7.7 percent month over month to 85.9 and dropped 3.0 percent from April 2024.
The Midwest index decreased 5.0 percent from the previous month to 73.5 and was up 2.2 percent year over year.
The Northeast PHSI declined just 0.6 percent from March 2025 to 62.1 and was down 3.0 percent on an annual basis.
Yun added that growing inventory should at least help homebuyers get a leg up in this market.
“Homebuyers have a better chance to purchase homes in affordable regions such as the Midwest, where the typical home price is $313,3000 — 25 percent below the national median home price,” Yun said. “Moreover, with housing inventory levels reaching five-year highs, homebuyers in nearly every region of the country are in a better position to negotiate more favorable terms.”
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