T
he National Association of Realtors' latest forward-looking sales indicator shows a 6.3% decline in contract signings in April, as buyers hold out for more favorable market conditions. Despite the highest number of homes for sale in years, home sales are falling short of expectations.

    Economists point to elevated mortgage rates as the primary culprit behind the slowdown. "Mortgage rates are the key factor at this critical stage of the housing market," says Lawrence Yun, chief economist at NAR. "Lower mortgage rates are essential to bring buyers back into the market."

    Mortgage rates have remained stubbornly high, hovering around 6%, which may be discouraging some buyers in an environment of rising home prices. The Pending Home Sales Index fell 2.5% year-over-year in April.

    The number of canceled contracts has increased, with 7% of sales contracts terminated over the last three months, up from 4% a year ago. This trend dampens optimism sparked by March's pending home sales report, which showed a significant surge in contract signings.

    Buyers may find an advantage in the current market: more homes are available for sale than ever before. Housing inventory has climbed nearly 21% from last year, according to NAR data. "With housing inventory levels at five-year highs, buyers in nearly every region can negotiate more favorable terms," Yun says.

    Regional trends suggest that home buyers may be faring best in the Midwest, where prices are lower than other parts of the country. While pending sales contracted 5% in April, existing-home sales rose 2.1% in the region last month.

    Here's a regional breakdown of contract signings in April:

    * Northeast: Contract signings fell 0.6% from March and were down 3% compared to last year.

    * Midwest: Pending sales dropped 5% but were still up 2.2% compared to 2024.

    * South: Contract signings decreased 7.7% and were down 3% from a year ago.

    * West: Pending sales fell 8.9% and were down 6.5% from April 2024.