U.S. Pending Home Sales Pull Back Much More Than Expected In April

(RTTNews) - A report released by the National Association of Realtors on Thursday showed a sharp pullback by pending home sales in the U.S. in the month of April.

NAR said its pending home sales index plunged by 7.7 percent to 72.3 in April after spiking by 3.6 percent to an upwardly revised 78.3 in March.

Economists had expected pending home sales to decrease by 0.6 percent compared to the 3.4 percent surge originally reported for the previous month.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

"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."

The sharp pullback by pending home sales reflected weakness in all regions of the country, with a 9.5 percent nosedive by pending home sales in the Midwest leading the way lower.

Pending home sales in the West and South also tumbled by 8.5 percent and 7.6 percent, respectively, while pending home sales in the Northeast slumped by 3.5 percent.

"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."

He added, "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."

The Commerce Department released a separate report last Thursday showing new home sales pulled back by much more than expected in the month of April.

The Commerce Department said new home sales plunged by 4.7 percent to an annual rate of 634,000 in April after surging by 5.4 percent to a revised rate of 665,000 in March.

Economists had expected new home sales to decrease by 1.9 percent to an annual rate of 680,000 from the 693,000 originally reported for the previous month.