(Bloomberg) — A gauge of pending U.S. existing home sales fell to a four-year low in April as rising mortgage rates cast a pall over the spring selling season.
Most read on Bloomberg
A National Association of Realtors index of contract signings fell 7.7% to 72.3, the lowest figure since the early months of the pandemic. The monthly decline was larger than all estimates in a Bloomberg survey of economists and the worst since February 2021. All regions of the United States saw declines from the previous month.
“The impact of rising interest rates throughout April dampened home purchases, even with more inventory on the market,” Lawrence Yun, NAR chief economist, said in a communicated. “But the Federal Reserve’s planned rate cut later this year should lead to better terms, with greater affordability and greater supply.”
Contract signings on second-hand homes have been stuck near the 4 million annualized mark for more than a year, with buyers facing high prices and mortgage rates near 7%. At the same time, sellers are reluctant to walk away from mortgages with much lower rates.
Sales were well over 6 million a year at the height of the pandemic-era buying frenzy in fall 2020.
New data suggests buyers aren’t benefiting from cost relief either. Prices in 20 major U.S. cities actually accelerated in March, rising 7.4% from a year ago, according to the S&P CoreLogic Case-Shiller Index.
Price increases should finally ease as more inventory hits the market, Yun said in a statement Thursday, although for now the 1.2 million homes on the market are well below current levels. ‘before the pandemic.
“The prospect of a measurable decline in house prices appears minimal,” Yun said. “The few markets that experience a decline in prices will be seen as a second chance for buyers to enter the market if these areas continue to create jobs. »
While many await a decision by the Fed to cut interest rates, officials are widely expected to keep rates at their highest level in 23 years when they next meet in June.
The Midwest saw the largest decline in pending sales, down 9.5% in April, followed by declines of 8.5% and 7.6% in the West and South, respectively. Contract signings in the Northeast fell 3.5%.
The pending sales report tends to be a leading indicator of used home sales because homes are typically under contract a month or two before they are sold.
–With help from Chris Middleton.
(Adds a chart)
Most read from Bloomberg Businessweek
©2024 Bloomberg LP
yahoo
