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By Omar Mohammed
Reporter, Economy & Finance
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Home sales dropped in April across the four regions of the country, according to the National Association of Realtors (NAR), another sign of a struggling housing market that is grappling with high prices and elevated mortgage rates.
Read more: First-Time Homebuyer Guide
Pending sales, an indicator of how many houses will be sold based on contract signings, fell close to 8 percent last month from March. On a yearly basis, sales were down more than 7 percent. This was the latest indicator of waning demand from buyers after both existing and new home sales posted declines in April.
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The housing market is facing a challenging moment during the Spring season when sales of homes tend to accelerate. Elevated interest rates at above 7 percent are to blame for depressed activity in the sector, according to experts.
"The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market," Lawrence Yun, NAR's chief economist, said in a statement.
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Yun did find a silver lining from expectations—that the Federal Reserve, which hiked rates two years ago to battle record inflation, may slash borrowing costs at some point in 2024.
Read more: Find the Lowest Rates From Top Mortgage Lenders
"The Federal Reserve's anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply," he said.
The key to whether buyers will take a plunge into the housing market remains whether they can afford home loans that have remained expensive. On Thursday, however, economic news that showed growth was slowing while inflation may be cooling had some economists suggesting that the Fed may reduce borrowing costs in September.
All regions in the country saw decreases in pending home sales. The Northeast posted a drop of 3.5 percent in April compared to the prior month. The Midwest, meanwhile, saw its sales nosedive 9.5 percent. The South recorded declines of 7.6 percent and the West's decreases hit 8.5 percent last month.
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Part of the reason that sales are down may be due to house prices that are at record levels. The median U.S. home sale price went up 4 percent to nearly $388,000 in the four weeks ending May 19, real estate platform Redfin pointed out last week. The median asking price rose to $420,000, which was also an all-time high.
"Home prices are hitting record highs, but the pace of gains should decelerate with more supply," Yun said. "However, the prospect of measurable home price declines appears minimal. The few markets experiencing price declines will be viewed as second-chance opportunities for buyers to enter the market if those regions continue to add jobs."
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