Pending home sales sales dropped 7.7% in April compared to March as rising mortgage rates weighed on the market, according to data released Thursday by the National Association of Realtors (NAR). Year over year, pending transactions fell 7.4%.

The NAR’s Pending Home Sales Index declined to 72.3 in April, down from 78.2 in March. All four U.S. regions reported decreases on both a monthly and yearly basis, with the Midwest and West experiencing the largest monthly declines.

“The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market,” NAR chief economist Lawrence Yun said in a statement. “But the Federal Reserve’s anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply.”

New-home sales, which are also based on contract signings, fell 4.7% month over month and 7.7% year over year in April, as the supply of existing homes increased and high mortgage rates hampered demand. Existing-home sales also declined last month to a seasonally adjusted annual rate of 4.14 million. But active inventory rose 30.4% in April compared to the same time last year,  according to data.

In March, U.S. home prices continued to climb, with the S&P CoreLogic Case-Shiller U.S. National Home Price Index recording a 6.5% annual gain, matching February’s growth.

“Home prices are hitting record highs, but the pace of gains should decelerate with more supply,” Yun said. “However, the prospect of measurable home price declines appears minimal. The few markets experiencing price declines will be viewed as second-chance opportunities for buyers to enter the market if those regions continue to add jobs.”

Despite mortgage rates remaining above 7%, home sales activity has been resilient, Bright MLS chief economist Lisa Sturtevant observed.

“For the past couple of years, the primary constraint on the housing market has been a lack of supply,” Sturtevant said in a statement. “Now, however, supply is increasing, but for many buyers, high home prices and mortgage rates are going to be the biggest challenge this summer.

“According to a recent survey conducted by Bright MLS, nearly three-quarters of real estate agents have had buyers pause their home searches due to high mortgage rates and prices.”

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