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Economy in Brief

U.S. Pending Home Sales Decline Sharply in April
by Tom Moeller  May 26, 2022

• Sales fall to lowest level since April 2020.

• Most regions of the country see weakness.

Home buying remains under pressure. The Pending Home Sales Index from the National Association of Realtors fell 3.9% (-9.1% y/y) during April after falling 1.6% in March, revised from -1.2%. It was the sixth consecutive monthly decline with total sales down 22.4% from the August 2020 peak.

Pending home sales declined in most of the country in April, except the Midwest where they rose 6.6% (-2.8% y/y) and recovered the prior month’s decline. Sales in the Northeast declined 16.2% (-14.3% y/y) to the lowest level since May 2020. In the South, sales fell 4.7% (-10.3% y/y), down 18.8% in the last six months. In the West, sales weakened 4.3% (-10.5% y/y), off 16.9% since October.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's PREALTOR database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the SURVEYW database.

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