In another sign that this will not be a typical spring buying season, contracts to sell existing single-family homes and condos fell 6.3% in April.
Analysts pointed to stubbornly high mortgage rates and general uncertainty about the economy as reasons why more people aren’t inking deals to buy homes.
“At this critical stage of the housing market, it is all about mortgage rates,” said Lawrence Yun, chief economist for the National Association of Realtors, the organization that released the data Thursday. “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.”
An NAR survey conducted in April and early May on listing agent confidence noted that 7% of contracts to buy homes in the most recent three-month period were canceled before the parties could close. That’s a sharp increase from 4% during the same period a year earlier.
There could be various reasons for the uptick in cancellations, but some likely factors include mortgage rates that are “jumping around” and a recent stock market downturn, Yun said last week.
Uncertainty about President Donald Trump’s tariffs and fears of renewed inflation are causing some would-be buyers to hold off on deals.
“I think we need to stabilize the uncertainty in the economy – that is a big reason people are pausing,” Ivy Zelman, executive vice president of market research firm Zelman, said in a May 19 webcast by real estate firm MBS Highway.
“Given that we’re seeing inventory rising, I think we’ll start to see an increase in turnover,” she added.
The inventory of existing homes for sale reached nearly 1.5 million in April, the NAR said in last week’s existing-sales report for the month. That was up more than 20% from one year ago. Still, sales of existing homes fell half a percentage point in April and were down 2% from the same time in 2024.
Compared to March, contracts to sell homes fell in all four major U.S. regions. The biggest decline was in the West at 8.9%, followed by the South at 7.7%, the Midwest at 5% and the Northeast at 0.6%.
Contracts increased in the Midwest by 2.2% from the same month in 2024. In the other three regions, the year-to-year trend was downward, including a 6.5% drop in the West and 3% declines in the South and Northeast.
“Home buyers have a better chance to purchase homes in affordable regions such as the Midwest, where the typical home price is $313,000 – 25% below the national median home price,” Yun said in a statement.
Expectations for mortgage rates, which remain close to 7%, are mixed. The average rate for a 30-year, fixed-rate mortgage rose to 6.89% in the seven-day period that ended Wednesday, up from 6.86% the prior week, according to Freddie Mac.
Oxford Economics chief economist Nancy Vanden Houten said in an email last week that existing home sales are likely to fall further in the coming months due to affordability constraints.
But Fannie Mae said last week that it had revised its sales forecast upward for the rest of the year, and that the average rate for a 30-year, fixed-rate mortgage would fall to 6.4% by the end of 2025.