Pending home sales slip for fifth straight month

Contracts fell by another 1.2% in March

Pending home sales declined in March for the fifth month in a row as buyers weigh rising interest rates and soaring prices.

The latest data from the National Association of Realtors indicates new contracts fell by 1.2% last month from February to 103.7 on the Pending Home Sales Index. Sales were down by 8.2% year over year, with pending sales slipping across all four regions of the U.S. to the lowest level in nearly two years.

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A "Sale Pending" sign outside a house in Discovery Bay, California, U.S., on Thursday, March 31, 2022. U.S.  (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)

"The falling contract signings are implying that multiple offers will soon dissipate and be replaced by much calmer and normalized market conditions," said Lawrence Yun, NAR's chief economist. "As it stands, the sudden large gains in mortgage rates have reduced the pool of eligible homebuyers, and that has consequently lowered buying activity."

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Indeed, homebuyer competition also dropped in March according to a recent report from real estate brokerage RedFin, which showed the number of bidding wars declined for the first time in six months.

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A Redfin real estate yard sign is pictured in front of a house for sale in Seattle, Washington.  ((Photo by Stephen Brashear/Getty Images for Redfin) / Getty Images)

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RedFin chief economist Daryl Fairweather expects that trend to continue, saying rising interest rates and high home prices "are prompting some Americans to back out or put their buying plans on hold."

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The average monthly mortgage payment rose year over year by an eye-popping 31% in March, and the cost of owning a home is expected to continue to climb as interest rates increase. The average rate for a 30-year fixed-rate mortgage, America's most popular home loan product, currently sits at a 12-year high of 5.11%.

Home Sales

In this Friday, May 22, 2020, file photo, a sold sign sits in front of a house in Brighton, N.Y. (AP Photo/Ted Shaffrey, File) (Associated Press / AP Newsroom)

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"The aspiration to purchase a home remains," Yun said, "but the financial capacity has become a major limiting factor."

FOX Business' Daniella Genovese contributed to this story.