Pending home sales in the United States fell by 6.3% in April, marking a broad decline in contract signings across all four major regions of the country. The National Association of REALTORS® (NAR) reported that the Pending Home Sales Index (PHSI) dropped to 71.3, well below the 100 mark that represents contract activity levels from 2001. This decline follows a 6.1% increase in March but signals a cooling housing market heading into the middle of 2025.
Regionally, the Midwest was the only area to see a year-over-year increase in contract signings, while the Northeast, South, and West all experienced declines. The West showed the steepest year-over-year drop, followed by the South, highlighting significant regional disparities.
Several factors are driving the downturn in pending home sales, with mortgage rates playing a central role. According to NAR Chief Economist Lawrence Yun, “At this critical stage of the housing market, it is all about mortgage rates.” Despite an increase in housing inventory, higher borrowing costs are deterring many potential buyers from committing to home purchases1.
Mortgage rates have hovered in the high 6% range for much of 2025, with the 30-year fixed-rate mortgage averaging around 6.81% in late April, slightly higher than the 6.65% average reported in late March. These rates are significantly above the historic lows seen in recent years and have a direct impact on monthly mortgage payments, reducing affordability for many buyers.
Higher mortgage costs mean that even modestly priced homes become less affordable, especially for first-time buyers or those with tighter budgets. This dynamic has contributed to a “buyers’ strike,” particularly in regions where home prices remain elevated relative to incomes. The South, for example, has seen pending home sales plunge to record lows amid ballooning inventories and persistently high prices.
Home prices, although showing some signs of stabilizing or even declining in select markets, remain high in many parts of the country. The rapid price increases of previous years, often exceeding 50% in some areas, have left many prospective buyers priced out of the market. This pricing pressure is compounded by rising mortgage rates, creating a double barrier for buyers.
Interestingly, housing inventory has increased, with new and existing home supplies reaching levels reminiscent of the 2007 financial crisis in some regions, especially the South. This growing inventory would typically signal more opportunities for buyers, but the combination of high prices and borrowing costs has kept demand subdued.
Builders and sellers have responded with incentives, price cuts, and mortgage-rate buydowns to attract buyers, but these measures have yet to significantly reverse the downward trend in contract signings.
Beyond mortgage rates and prices, broader economic concerns are influencing buyer behavior. Trade tensions, tariff uncertainties, and fears of an economic slowdown have shaken consumer confidence. Even with solid job growth reported in early 2025, many potential buyers remain cautious about making large financial commitments like home purchases.
Realtor.com Senior Economist Joel Berner points out that consumers are “closely attuned to the grim economic news and water cooler chat,” which affects their timing and willingness to buy. This sentiment is reflected in the cautious approach to home buying despite some positive indicators in the labor market.
The Midwest’s relative strength in pending home sales year-over-year may be attributed to more affordable home prices and less severe inventory gluts. In contrast, the West and South face the largest declines, driven by high prices, rising insurance costs in some states, and growing inventories that have yet to translate into sales.
The Northeast also continues to experience a decline, though less severe than in the South and West. This regional variation underscores how local economic conditions, housing supply, and affordability influence buyer behavior differently across the country.
The drop in pending home sales signals a cautious housing market environment. For businesses and investors connected to real estate, construction, and mortgage finance, these trends suggest a need to adapt strategies to slower sales and shifting buyer preferences.
The 6.3% decline in U.S. pending home sales in April reflects a market grappling with high mortgage rates, elevated home prices, and economic uncertainty. While the Midwest shows some resilience, the South and West face significant challenges, with inventory increases not yet translating into higher sales. The housing market’s trajectory in the coming months will depend heavily on mortgage rate movements and broader economic developments.
