Pending Homes Sales Decline for Sixth Consecutive Month in April, Falling -9.1% Year-Over-Year

The National Association of Realtors® (NAR) reported on Thursday (5-26-22) their Pending Homes Sales Index (PHSI), which is based on signed real estate contracts, not actual closings, for existing single-family homes, condominiums, and co-ops, declined -3.9% in April to a reading of 99.3. This marks the sixth consecutive monthly decrease in contract activity. Year-over-year, contract signings have declined -9.1%.

An index of 100 is equal to the level of contract activity in 2001.

According to the PHSI in April, three out of the four major regions reported declines, with only the Midwest experiencing a month-over-month increase. Year-over-year, all four regions registered a drop-in contract activity.

In a statement prepared to accompany the release of the April PHSI, Lawrence Yun, NAR’s chief economist, said, “Pending contracts are telling, as they better reflect the timelier impact from higher mortgage rates than do closings. The latest contract signings mark six consecutive months of declines and are at the slowest pace in nearly a decade.”

With mortgage rates rising, Yun forecasts existing-home sales to wane by 9% in 2022 and home price appreciation to moderate to 5% by year’s end. Yun notes that “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.”