May 30 Reuters Contract signings for U.S. home purchases fell by the most in three years in April and the overall level of activity was the lowest since the onset of the COVID19 pandemic in the spring of 2020, as high interest rates keep a lid on the housing market, the National Association of Realtors said on Thursday.

The NAR said its pending home sales index fell 7.7 in April to 72.3 from an upwardly revised 78.3 reading in March. The drop was the largest since February 2021 and the index level was the lowest since the recordlow reading of 71.8 in April of 2020.

The index is meant to be predictive of completed home sales transactions one to two months later.

The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market, said Lawrence Yun, the NAR39;s chief economist. But the Federal Reserve39;s anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply.

The Fed has raised interest rates by 5.25 percentage points since March 2020 to combat inflation. Rates have been on hold since last July and the year began with expectations for as many as three quarterpercentagepoint rate cuts this year, but stifferthanexpected inflation to start the year has changed the Fed39;s tone. Bond market pricing now reflects the likelihood of no more than two rate cuts this year.

Reporting by Dan Burns; Editing by Paul Simao

Source Reuters