BY EMMANUEL OGBONNA
Contracts to purchase previously owned homes in the United States increased for a third consecutive month in April, offering a modest sign of resilience in the housing market as a brief decline in mortgage rates encouraged some buyers to return despite continuing affordability challenges.
Data released Tuesday by the National Association of Realtors showed the pending home sales index, which tracks signed contracts for existing homes, rose 1.4% in April to a reading of 74.8. The increase exceeded economists’ expectations and marked another month of improvement after a sluggish start to the year for the housing sector.
Pending sales are considered a forward-looking indicator because contracts typically translate into completed home purchases within one or two months.
Despite the stronger-than-expected gain, many economists remained cautious about the broader outlook for the housing market, warning that elevated mortgage rates, limited inventory and economic uncertainty are still likely to weigh heavily on demand throughout the remainder of the year.
Analysts said the April increase appeared to be driven largely by a temporary easing in borrowing costs earlier in the spring, which gave some prospective buyers a short window of improved affordability before mortgage rates moved higher again.
Regional data showed significant variation across the country. Pending home sales surged 6.6% in the Northeast and rose 3.0% in the Midwest. The West posted a modest gain of 0.4%, while the South, which represents the largest share of the U.S. housing market, recorded a slight decline of 0.7%.
Compared with the same period a year earlier, pending home sales were up 3.2% in April, suggesting some stabilization after a prolonged downturn in housing activity caused by high financing costs and elevated home prices.
Even so, economists said the broader market remains constrained by several structural challenges that continue to limit both affordability and transaction volumes.
Oliver Allen, senior economist at Pantheon Macroeconomics, said the recent gains do not yet signal a sustained recovery in housing activity. He pointed to slowing population growth, weakening labor market conditions and declining consumer confidence as factors likely to restrain demand in the coming months.
Housing affordability remains one of the biggest obstacles for buyers, particularly first-time homeowners. Mortgage rates are still significantly higher than levels seen earlier in the year, while home prices continue to remain elevated because of limited supply.
The widely used 30-year fixed mortgage rate climbed sharply to an average of 6.46% at the beginning of April, according to mortgage finance agency Freddie Mac. The increase came amid rising Treasury yields and higher oil prices linked to escalating tensions involving Israel and Iran, which contributed to volatility across global financial markets.
Earlier in the year, mortgage rates had briefly fallen below 6% following increased purchases of mortgage-backed securities by housing finance giants Freddie Mac and Fannie Mae, creating a temporary boost for prospective buyers. However, rates rebounded again later in April and have continued trending upward in recent weeks.
Economists noted that mortgage rates are closely tied to movements in U.S. Treasury yields, meaning geopolitical uncertainty and inflation concerns can quickly affect borrowing costs for homebuyers.
The housing market has struggled throughout 2026 as higher interest rates combine with rising construction costs, tariffs on imported materials such as lumber and ongoing shortages of available homes.
Housing inventory remains particularly limited for entry-level properties, leaving many younger and lower-income buyers unable to afford homes despite strong demand. The shortage of starter homes has helped keep prices elevated even as sales activity slowed.
Recent data from the Federal Housing Finance Agency showed that the median single-family home price increased 1.7% in the 12 months through February, underscoring how prices have remained resilient despite weaker market conditions.
At the same time, residential investment — a category that includes home construction, remodeling and real estate commissions — has contracted for five consecutive quarters, reflecting the broader slowdown across the housing industry.
Homebuilders have also expressed concern about the market outlook. A separate survey released earlier this week showed builder sentiment remained subdued in May, with developers citing mortgage rates, geopolitical uncertainty, high labor expenses and rising land and material costs as ongoing pressures.
Many economists believe housing activity is unlikely to experience a significant rebound until borrowing costs decline more meaningfully or inventory levels improve substantially.
Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said rising interest rates and broader economic uncertainty are expected to continue limiting home sales in the near term.
She noted that mortgage rates have increased notably since the end of April, while higher gasoline prices and concerns about household budgets may further discourage buyers from entering the market.
Analysts now expect the housing sector to remain under pressure through much of the year, with a more substantial recovery potentially delayed until later in 2026 if inflation moderates and interest rates begin to ease more consistently.
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