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April Pending Home Sales Rise Despite Macro Uncertainty

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April Pending Home Sales Rise Despite Macro Uncertainty

US pending home sales increased more than expected last month as home buyers apparently shrugged off mounting economic uncertainty.

The forward-looking indicator of home sales based on contract signings increased 1.4% month over month in April, the National Association of Realtors said Tuesday. Analysts expected a 1% gain, according to a survey compiled by Bloomberg.

"Buyers are coming out with cautious optimism despite increasing economic uncertainty and a slight rise in mortgage rates," NAR Chief Economist Lawrence Yun said. "Demand will easily be even higher once mortgage rates retreat to the levels they were at earlier this year."

The Middle East conflict has fueled macro uncertainty amid supply disruptions that have intensified inflationary pressures.

The average 30-year fixed mortgage rate was 6.36% as of May 14, slightly down from 6.37% a week ago, Freddie Mac data showed. Rates fell below 6% toward the end of February.

Sequentially, pending home sales increased in the Northeast, Midwest and West, while the South saw a drop.

"Historically low foreclosure sales imply minimal price discounts, with a majority of markets selling at a higher price from a year ago," Yun said. "Unless supply meaningfully increases, home price growth could outpace wage growth and further erode the homeownership rate. All efforts need to be focused on boosting housing supply."

On Thursday, Redfin said US pending home sales for the four weeks ended May 10 rose 9.6% year over year, the highest level since September 2022.

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