HousingWireHousingWire
Recent reports have painted a relatively optimistic picture of the housing market, but that may be changing.
The April 2025 Pending Home Sales Index (PHSI) from the National Association of Realtors (NAR) dropped to a reading of 71.3, a 6.3% drop compared to March. All four regions of the U.S. experienced declines. It’s a 2.5% decline year over year and the biggest monthly decline since September 2022.
An index reading of 100 is equal to contract levels in 2001.
The month-over-month rise of 6.1% in March, however, was the highest monthly increase since December 2023. This suggests that demand has been highly responsive to mortgage rates, which had dropped in March but shot back up to 7% after the April 2 tariff announcement that sent the stock market, bond market and the dollar into free fall.
“At this critical stage of the housing market, it is all about mortgage rates,” NAR chief economist Lawrence Yun said in a statement. “Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market.”
The South makes up the bulk of existing-home sales, so it’s no surprise that the national drop was accompanied by a similar decline in the region. Pending sales there fell 7.7% from April and 3% year over year.
The West (-8.9%), Midwest (-5%) and Northeast (-0.6%) also fell on a monthly basis. The Midwest posted the only year-over-year gain at 2.2%.
The decline in pending home sales comes even as inventory is up substantially relative to last year. According to Altos data, the number of homes for sale nationally is up 32.5%, with new listings up 9.6%.
Existing-home sales for April shows a similar trajectory, albeit not as dramatic. Sales registered at a seasonally adjusted annual rate of 4 million, a 0.5% monthly drop. But new-home sales rose by 10.9% compared to March.
“Elevated mortgage rates and economic uncertainty are headwinds for the housing market,” First American deputy chief economist Odeta Kushi said in a statement. “However, rising inventory, which puts downward pressure on prices and allows incomes to catch up, serves as a tailwind.”
