Homebuyers and sellers went under contract at a faster yearly and monthly pace in April, defying higher mortgage rates and spiking household costs stemming from the ongoing war in Iran.

Reversing an annual decline in contract signings the previous month, updated figures published by the National Association of Realtors (NAR) show pending home sales increased 3.2% from last April and 1.4% from March.

“The increase in pending home sales suggests the U.S. housing market is stabilizing after a slow start to the year,” said Sam Williamson, senior economist at title insurance giant First American Financial Corp.

“Even so, pending sales are only 1.6% above their 2025 average,” he noted in email to Scotsman Guide, “suggesting the spring market is improving gradually, but not accelerating.”

Nevertheless, only the South recorded a monthly decline, while the Northeast was the only region to post a yearly contraction, reflecting the broad-based sales momentum in April.

“Demand will easily be even higher once mortgage rates retreat to the levels they were at earlier this year,” said NAR Chief Economist Lawrence Yun, voicing confidence in Tuesday’s report. “Buyers are coming out with cautious optimism despite increasing economic uncertainty and a slight rise in mortgage rates.”

Mortgage rates on typical 30-year home loans were around 6% when the Iran war began on Feb. 28. In the two months since, they have surged to between 6.3% and 6.5%.

Prospective buyers are also facing the burden of spiking inflation from energy and trade shocks stemming from the Middle East conflict. The consumer price index, a closely watched measure of inflation, rose to its highest level since 2023 in April as higher grocery expenses joined surging gasoline and fuel costs.

While mortgage rates remain below the roughly 6.8% threshold borrowers had to contend with last spring, homebuyers have watched mortgage affordability steadily decline in recent months as home prices continue to rise amid a structural supply shortage.

Without a significant increase in supply, Yun warned that affordability will remain strained.

“Unless supply meaningfully increases, home price growth could outpace wage growth and further erode the homeownership rate,” he noted. “All efforts need to be focused on boosting housing supply.”

Pending sales provide an indicator of upcoming closed home sales, though the duration between pending contracts and completed sales can vary from a few weeks to a few months. Some pending contracts fall through and never translate to closed sales.

Despite stiffening affordability headwinds, pending home sales data from April attests to firming homebuying demand, reflecting unexpected resilience that other market indicators have also shown.

Purchase mortgage rate-lock volumes were 9% higher than a year ago in April, according to hedging and market intelligence platform Optimal Blue. First-time buyers accounted for 47% of conforming purchase rate locks meeting Fannie Mae and Freddie Mac underwriting guidelines last month, up 3% over the year.

Regionally, NAR reported pending sales climbed 6.6% in the Northeast from March levels, while rising 3% in the Midwest and 0.4% in the West. Pending sales declined 0.7% in the South region last month.

From year-ago levels, pending sales fell 0.6% in the Northeast but increased 2.7% in the Midwest, 4.7% in the South and 3.8% in the West.

“The latest data suggest the early spring market is shaping up to be another year of modest improvement, rather than the stronger breakout many had hoped for entering the year,” added First American’s Williamson, “when lower mortgage rates and rising household incomes were boosting consumer house-buying power.”