Pending home sales continued spiraling downward in April, a 3.9% decrease from a month prior, resulting in an index reading of 99.3, according to data released Thursday by the National Association of Realtors.
In March the index’s reading was 103.7. An index of 100 is equal to the level of contract activity in 2001.
The decline marked the sixth consecutive month of decreases and the 11th consecutive month of year-over-year drops for the Pending Home Sales Index. According to NAR chief economist Lawrence Yun, it’s the slowest pace of contract signings in nearly a decade.
“The escalating mortgage rates have bumped up the cost of purchasing a home by more than 25% from a year ago, while steeper home prices are adding another 15% to that figure,” Yun said.
Yun expects existing home sales to fall by 9% in 2022 with home price appreciation leveling off to 5% by the end of the year.
“If mortgage rates stabilize roughly at the current level of 5.3% and job gains continue, home sales could also stabilize in the coming months,” Yun said. “Home sales in 2022 are expected to be down about 9%, and if mortgage rates climb to 6%, then the sales activity could fall by 15%. Home prices in the meantime appear in no danger of any meaningful decline. There is an ongoing housing shortage, and properly listed homes are still selling swiftly – generally seeing a contract signed within a month.”
All four major U.S. regions recorded year-over-year decreases in contract signings. The Northeast saw the largest drop at 14.3% to a reading of 74.8. Month over month, the South (119.0), the West (85.9) and the Northeast (74.8) saw decreases of 4.7%, 4.3% and 16.2%, respectively. The Midwest was the only region to record a monthly increase (6.6%), bringing its index to 100.7.