Agreements to buy existing homes across the United States climbed for the third consecutive month during April, as declining mortgage rates encouraged more buyers to enter the market.
The National Association of Realtors announced Tuesday that their pending sales index climbed 1.4% in April, reaching 74.8. This growth exceeded predictions from economists surveyed by Reuters, who had anticipated a 1.0% increase in contracts, which typically convert to completed sales within one to two months.
Regional performance varied significantly, with the Northeast experiencing a dramatic 6.6% jump in contracts and the Midwest seeing a 3.0% increase. The West recorded modest growth of 0.4%, while the South experienced a 0.7% decline.
According to data from mortgage finance agency Freddie Mac, the widely-used 30-year fixed mortgage rate spiked to an average of 6.46% at April’s start, driven by the U.S.-Israel war with Iran that pushed up oil prices and U.S. Treasury yields.
This rate, which follows Treasury yield movements, had previously fallen to 5.98% before the conflict began, aided by increased mortgage-backed securities purchases from Freddie Mac and Fannie Mae. By April’s conclusion, it averaged 6.30%.
“Buyers are coming out with cautious optimism despite increasing economic uncertainty and a slight rise in mortgage rates,” said Lawrence Yun, the NAR’s chief economist. “Demand will easily be even higher once mortgage rates retreat to the levels they were at earlier this year.”
The housing sector has struggled throughout this year, burdened by elevated borrowing costs, tariffs on imported materials including lumber, along with limited inventory and high home prices.
Residential investment, encompassing home construction and broker commissions, has declined for five consecutive quarters.
A Monday survey revealed that homebuilder confidence remained weak in May, with mortgage rates and economic uncertainty from Middle East conflicts, plus high costs for land, labor and construction materials cited as limiting factors.
