Pending Home Sales Fall for Sixth Straight Month Due to High Prices and Mortgage Rates

Abstract

The numbers: An index of pending U.S. home sales slumped 3.9% in April and fell for the sixth month in a row, signaling a sharp slowdown in the real estate market due to record home prices and rising mortgage rates. The index reflects transactions in which a contract has been signed for the purchase of a previously owned home, but the sale has not yet closed. Economists view the index as a bellwether for future home sales. Key details: Pending home sales fell last month in all major regions except for the Midwest. Year over year transactions were off 9.1%. The big picture: High prices and escalating mortgage rates have made homes less affordable. Lawrence Yun, NAR's chief economist, said higher rates have added as much as $500 a month to the cost of some mortgages. Homeowners with low mortgage rates, what's more, may be less inclined to sell since they would have to buy another property at sharply higher interest rates.