Pending Home Sales Slump 7.7% in April

The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. The index slumped 7.7% in April to 72.3, its lowest level since April 2020 and more than the forecasted 1.1% decline. Pending home sales are down 7.4% from one year ago.

"The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market," said NAR Chief Economist Lawrence Yun. "But the Federal Reserve's anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply."

"Home prices are hitting record highs, but the pace of gains should decelerate with more supply," said Yun. "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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Pending Home Sales Background

The pending home sales index (PHSI) was created by the National Association of Relators to track home sales where the contract is signed, but the transaction has not yet closed. An index of 100 is equal to the level of contract activity in 2001. The PHSI is a leading economic indicator of future existing home sales.

The chart below gives us a snapshot of the index since 2001, the first year data was analyzed. Pending Home Sales Index

Over this time frame, the US population has grown by 18.5%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.

Pending Home Sales Growth

The above chart shows the percent off turn-of-the-century values. The index for the most recent month is currently 44% below its all-time high from August 2020. The population-adjusted index is 50% off its high from April 2005.