Pending sales data brings ‘good news’ to lagging housing market 

The spring homebuying season continues to slip sideways as conflicting economic data paints a muddled picture for both buyers and sellers.

The positive signals: increased pending sales, slightly increasing inventory and a rise in Google home searches. But homes are staying on the market longer, new listings are down and mortgage applications have slowed.

Mortgage rate volatility persists

While mortgage rates have continued bouncing around in reaction to the geopolitical news of the day, they remain below last year's levels. This week, Freddie Mac estimated that the 30-year fixed-rate mortgage averaged 6.37%, up from 6.3% the week before but below this time last year, when the rate averaged 6.76%.

Mortgage News Daily (MND), which uses a different set of metrics to determine the daily rate, noted a downward trend over the past two days amid investor hopes that the U.S. and Iran could be getting closer to a peace deal. MND pegged the 30-year rate at 6.44% on May 7.

How mortgage rates change going forward will largely depend on what happens with the war in the Middle East, said Hannah Jones, senior economic research analyst at Realtor.com.

"The ongoing conflict has kept oil prices elevated, feeding inflation and giving the Federal Reserve little reason to cut rates anytime soon," Jones said. "The bottom line for borrowers is that the forces keeping rates up are global, and there is no clear near-term catalyst for a meaningful, sustained decline."

Even so, "mortgage rates remain near their lowest levels in the last few springs, meaning buyers are still in a better position to afford a home this buying season compared to years past," Jones added.

Signs of improved affordability

If rates cooperate, there are some pieces in place for a spring housing market rebound, according to Mischa Fisher, chief economist at Zillow. The company's market report for April found that conditions have gotten friendlier for buyers, with affordability improved compared to a year ago. The report estimated that the monthly mortgage payment on a typical U.S. home has dropped 3.4% compared to a year ago.

"With more homes to choose from and lower monthly costs than a year ago, the math has shifted in favor of buyers even if the moment may not feel like it," Fisher said.

Financing activity still sluggish — especially for first-time buyers

The latest mortgage application data indicates buyers are not yet feeling the moment, with the Mortgage Bankers Association (MBA) reporting that overall applications fell 4.4% for the week ending May 1 compared to a week earlier. However, the unadjusted purchase applications index was 5% higher than the same week last year, though it had dropped 3% week-over-week.

Meanwhile, the average loan size for a purchase application was $467,300 — "the highest in the survey's history dating back to 1990," said Joel Kan, MBA's vice president and deputy chief economist.

"This increase could indicate that potential first-time buyers, and buyers looking for homes at lower price points, might be the most hesitant to move forward given the economic uncertainty and higher rates," Kan added.

Pending sales uptick is 'good news.' Will it continue?

But new pending home sales data is providing real estate agents with some hope.

Mike Simonsen, chief economist at Compass, estimates pending sales jumped 10% this week compared to the same period a year ago, putting the four-week rolling average 6.5% ahead of 2025. He also noted that inventory is up 1.8% compared to last year.

"It'll be interesting to see if we maintain this recent strength in the sales numbers or if this was a couple-week reprieve. But for now, we'll call it good news," Simonsen said in his weekly YouTube update.

In its rolling four-week report, Redfin estimated that pending home sales were up 7.7% as of May 3 — the highest level in over three years — and Google "homes for sale" searches were up over 20% compared to the same time last year. But homes are taking longer to sell, with the typical home taking 43 days to go under contract — up from 40 days this time last year — and new listings dropped 1.8% year-over-year.

Spring seasonality is kicking in later than usual, Redfin economists noted, and though most buyers remain cautious, many of those ready to make a home purchase are being picky.

"Some homes are attracting multiple offers, but only those that are priced fairly and have been updated," said Ashley Arzer, a Redfin Premier agent in Chicago. "A new kitchen and new bathroom are the ticket to a bidding war. Older homes that need repairs, and those far above the most popular price range — around $400,000 in Chicago — are taking longer to sell."