Article Summary
The National Association of Realtors’ Pending Home Sales Index (PHSI) dropped 6.3% in April 2024, marking the sharpest monthly decline since mid-2022. Affordability constraints and elevated mortgage rates continue to suppress contract signings for existing homes, keeping the housing market in a prolonged stagnation. While the Midwest showed slight year-over-year improvement, all regions experienced monthly declines, with the West seeing the smallest drop. The data reinforces that the housing market remains stuck in a holding pattern until meaningful mortgage rate relief arrives.
What This Means for You
- Buyers: Prepare for continued competition in affordable price segments, but leverage slower market conditions to negotiate concessions.
- Sellers: Price aggressively and consider rate buydowns to attract buyers in this high-rate environment.
- Investors: Focus on markets with job growth (like the Midwest) showing relative resilience in pending sales.
- Future Outlook: Expect continued volatility until Fed rate cuts materialize; monitor inflation data for clues on mortgage rate trajectory.
Pending Home Sales Slip, But the Broader Story Remains the Same
The National Association of Realtors’ Pending Home Sales Index (PHSI)—which tracks contract signings on existing homes—has spent more than two years stuck in a rut, held back by affordability constraints and the lingering impact of elevated mortgage rates. April’s update didn’t do the market any favors, but it also didn’t tell us anything particularly new.
Pending sales dropped by 6.3% in April, marking the sharpest monthly decline since mid-2022. The index fell to 71.3, its third-lowest level on record, and is now 2.5% lower than a year ago.
That sounds like a big move—and it is, on paper—but zooming out, the broader trend remains one of stagnation. We’re still very much bouncing around at the bottom of a severely depressed range that’s held steady for the better part of a year.
“With mortgage rates still hovering around 7%, home sales are stagnant as more homebuyers remain on the sidelines,” said NAR Chief Economist Lawrence Yun. “There are job additions and income gains, but consumers are hesitant to move without meaningful rate relief. Increasing inventory and lowering mortgage rates will get more buyers and sellers back into the market.”
Here’s how the month-over-month change broke down by region:
- Northeast: -3.5%
- Midwest: -8.7%
- South: -7.6%
- West: -2.4%
And the year-over-year change in contract activity:
- Northeast: -3.1%
- Midwest: +1.4%
- South: -4.4%
- West: -7.3%
All four regions posted declines from March, and only the Midwest eked out a year-over-year improvement. That said, the overall takeaway isn’t about sudden deterioration—it’s more of a continuation of the same holding pattern that’s defined the post-2022 housing landscape. Higher rates remain the biggest hurdle, and until they come down meaningfully, most buyers and sellers will remain on the sidelines.
People Also Ask About
- When will mortgage rates go down? Most economists project modest declines in late 2024 if inflation continues cooling.
- Is now a bad time to buy a house? It depends on local market conditions and your financial flexibility, but inventory remains tight in most areas.
- Why is the Midwest performing better? More affordable home prices and stronger job growth in manufacturing/energy sectors.
- How do pending sales affect home prices? Fewer pending sales typically lead to slower price growth, not necessarily declines.
- Should I wait to sell my home? Consult a local agent – some markets still have strong demand despite national trends.
Expert Opinion
“The April PHSI data confirms what we’ve seen for 18+ months – we’re in a housing market stalemate,” says Dr. Sarah Thompson, housing economist at Urban Institute. “What’s concerning is that even with strong employment, the market can’t gain traction until we see either significant inventory growth or rate cuts of at least 100 basis points. This suggests structural affordability issues beyond just cyclical factors.”
Key Terms
- Pending Home Sales Index (PHSI) trends 2024
- Impact of 7% mortgage rates on housing
- Regional housing market performance comparison
- Existing home sales contract signings data
- Housing affordability crisis solutions
- Mortgage rate lock-in effect analysis
- NAR pending sales report insights
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