Signed sales contracts on existing homes dropped 7.7% in April compared to March, the slowest pace since April 2020, according to the National Association of Realtors.

These so-called pending sales are a forward-looking indicator of closed sales one to two months later. Pending sales were 7.4% lower than in April of last year.

Sales were expected to be flat compared to March.

Since the count is based on signed contracts, it shows how buyers are reacting to mortgage rates in real time. The average rate on the 30-year fixed mortgage ended March at around 6.9% and then took off, hitting 7.5% by the end of April, according to Mortgage News Daily.

With home prices still climbing and supply very low, leading to increased competition, that jump in rates had a huge effect on sales.

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

Sales were down in every region of the country, but they fell hardest in the Midwest and West. The former has some of the most affordable markets in the nation, and the latter has some of the most expensive.

“The prospect of measurable home price declines appears minimal. The few markets experiencing price declines will be viewed as second-chance opportunities for buyers to enter the market if those regions continue to add jobs,” Yun added.

Perhaps in reaction to the slow sales pace in April, the share of sellers cutting prices in May hit 6.4%, the highest level since 2022, according to a new report from Redfin. The median asking price also dropped for the first time in six months.

Active inventory in April was 30% higher than in April 2023, according to Realtor.com, which suggests the summer market could be more active than last year.

“Though inventory and prices are moving in a more buyer-friendly direction, lower mortgage rates will be crucial in bringing both buyers and sellers back into the market,” said Hannah Jones, senior economic research analyst with Realtor.com.