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The U.S. housing market is flashing warning signs. New data from the National Association of Realtors (NAR) shows that pending home sales fell sharply in April, dropping 6.3% from the previous month—a much steeper decline than economists anticipated.
Year-over-year, contract signings also slid 2.5%, with the steepest drops occurring in the Western and Southern U.S.
This slowdown is happening at the same time that housing inventory is surging. According to a new report from BusinessWire, there are now nearly 500,000 more home listings than active buyers—the largest mismatch on record.
For sellers still holding onto the frenzy of the 2021–2022 boom, this marks a dramatic turn in market conditions.
Mortgage Rates Are Still in the Driver’s Seat
As NAR Chief Economist Lawrence Yun put it plainly, “At this critical stage of the housing market, it is all about mortgage rates.”
In April, the average rate on a 30-year fixed mortgage jumped to 6.81%, up from 6.65% in March, according to Freddie Mac. Higher borrowing costs are sidelining prospective buyers, making monthly payments unaffordable even as more homes become available.
“Despite an increase in housing inventory, we are not seeing higher home sales,” Yun added. “Lower mortgage rates are essential to bring home buyers back into the housing market.”
In other words, until financing becomes more affordable, don’t expect demand to rebound in a meaningful way—no matter how many homes hit the market.
Regional Breakdown: Midwest Shows Resilience, West Takes a Hit
The downturn in pending home sales wasn’t isolated to one region—it was national:
West: Down 8.9% month-over-month, 6.5% year-over-year
South: Down 7.7% from March, 3.0% from a year ago
Northeast: Down 0.6% from the previous month, 3.0% year-over-year
Midwest: Down 5.0% from March, but up 2.2% from April 2024
Buyers continue to gravitate toward the Midwest, where homes are significantly more affordable.
The median price in the region is $313,000, about 25% below the national average, offering better value and lower monthly payments in a market otherwise dominated by high costs and limited affordability.
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Record Seller Surplus Signals Price Pressure Ahead
According to a new housing market report, there are currently 495,000 more homes listed for sale than there are buyers actively shopping—the largest gap ever recorded.
In economic terms, that much excess supply almost always translates into downward pressure on prices. Analysts believe that many markets, particularly high-cost areas in the West and South, are now vulnerable to price corrections in the coming months.
Homeowners who once enjoyed bidding wars and waived inspections are now having to offer concessions, reduce prices, and negotiate with leverage-shifting back to buyers. It’s a stark reversal from just two years ago.
Will Trumponomics Revive the Housing Market?
Attention is turning to how President Trump's second-term agenda—focused on lower taxes, deregulation, energy independence, and interest rate relief—will impact the housing sector.
Trump has made restoring economic confidence and affordability a top priority, calling out the Fed’s sluggish response to inflation and signaling support for policies that encourage homeownership without overregulation.
The housing challenges we’re seeing today are not of Trump’s making. Many stem from the fiscal mismanagement and inflationary pressures carried over from the prior administration. Trumponomics now faces the test of turning the tide—by encouraging lending, reducing inflationary drag, and jumpstarting real growth.
The White House has also expressed support for increasing housing supply through reduced red tape and incentivizing construction, particularly in affordable regions. These efforts may take time to materialize, but they signal a much-needed shift toward market-based solutions.
Bottom Line: A Market in Transition
America’s housing market is in flux. The combination of high mortgage rates, record-high inventory, and economic uncertainty has created a chilling effect on demand.
For would-be buyers, the coming months could present opportunities—especially in markets where prices begin to fall. For sellers, it’s a different story: those who wait too long to adjust to new realities may find themselves chasing the market downward.
Whether the housing market can stabilize will depend heavily on how quickly borrowing costs come down, how confident consumers feel about the economy, and how aggressively President Trump’s economic team moves to support sustainable homeownership.
Until then, smart investors will keep watching the fundamentals, staying ready to act—not react—in what may be one of the most pivotal real estate cycles in decades.
