The number of signed contracts to buy homes can be a good indicator of where home sales are headed. After all, there are several weeks between when a buyer's offer is accepted and when the deal is closed. That means the number of contracts to buy homes signed in one month is a good indicator of where the next month's sales numbers will fall.
The National Association of Realtors tracks pending home sales for this reason. Its Pending Home Sales Index can provide a more current picture of sales activity. According to the most recent release, activity has slowed. In fact, contract signings in April were down more than 7 percent.
Lawrence Yun, NAR's chief economist, says higher rates in April are behind the decline. “The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market,” Yun said. “But the Federal Reserve's anticipated rate cut later this year should lead to better conditions with improved affordability and more supply.” According to the report, pending sales fell across all regions, though the biggest declines were seen in the West and Midwest.
[Source: NAR]
