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First Cut: Pending Home Sales Index well into recessionary territory in April

The NAR’s Pending Home Sales Index fell 21.8% to 69.0 in April from March and was off 33.8% from the year-ago month. The steep decline in pending homes sales in the past two months presages further weakening in sales of existing homes with few contracts to close. Extraordinarily attractive mortgage rates may keep some well-qualified buyers in the market, but given the level of unemployment and collapse in consumer confidence, both borrowers and lenders are going to be cautious about taking out a mortgage. Sales are likely to be slow for some months yet.

Sales were down sharply in all four regions. The Northeast led with a plunge of 48.2%, followed by the West with a drop of 20.0%, the Midwest down 15.9%, and the South off 15.4%. The largest declines are associated with areas where the spread of COVID-19 has been the most visible and were government orders to stay-at-home have kept consumers indoors.

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