In the latest real estate news, signed sales contracts on existing homes dropped 7.7% in April compared with March, marking the slowest pace since April 2020, according to the National Association of Realtors. This decline in pending sales is a key indicator of closed sales expected in the coming months and highlights the impact of rising mortgage rates on the housing market.
With the average rate on the 30-year fixed mortgage climbing from around 6.9% at the end of March to 7.5% by the end of April, potential homebuyers are feeling the pinch of higher borrowing costs. This, coupled with limited housing supply and increasing competition, has contributed to the decrease in sales activity seen across all regions of the country, with the Midwest and West experiencing the sharpest declines.
However, there is hope on the horizon as the Federal Reserve is expected to implement a rate cut later this year, which could improve affordability and stimulate more activity in the housing market. Additionally, despite the slowdown in sales, there are signs of a changing landscape, with a rise in inventory and an increase in the share of sellers cutting prices to attract buyers.
Looking ahead, the summer market is poised to be more active than last year, with active inventory in April up 30% compared to the same time in 2023. Lower mortgage rates are expected to play a crucial role in encouraging both buyers and sellers to re-enter the market, creating a more balanced and dynamic real estate environment.
Stay tuned to Extreme Investor Network for more insights and analysis on the latest trends in the business and real estate world, and how they could impact your investment decisions.