Finance

Pending home sales fall for fourth straight month

Pending home sales fall for fourth straight month

The housing market in the United States could finally cool down.

Pending home sales, a leading indicator of the health of the housing market, fell for the fourth consecutive month. the National Association of Realtors (NAR) Pending Home Sales Index, which tracks the number of homes under contract for sale, fell 4.1% in February from January and 5.4% from the same month a year ago. The results were disappointing, with analysts predicting a 1.0% increase in sales from the previous month, according to Bloomberg consensus estimates.

Contract signings were down in all four regions of the United States compared to the same period a year ago. Only the Northeast recorded an increase in activity compared to the previous month.

“Pending transactions declined in February mainly due to low numbers of homes for sale,” Lawrence Yun, NAR’s chief economist, said in a press release. “Buyer demand is still intense, but it’s as simple as ‘you can’t buy what’s not for sale.'”

Total housing stock remains depressed. At the end of February, there were 870,000 units available for sale, up 2.4% from January and down 15.5% from a year ago, according to the NAR. Unsold inventory sits at 1.7 months supply at the current selling rate, up from record high supply of 1.6 months in January and down from 2.0 months in February 2021.

Lack of inventory is pushing home prices to record highs.

The median existing home price for all housing types in February rose 15% to $357,300, up 15.0% from February 2021 as prices rose in every region. This marks 120 consecutive months of year-over-year increases, the longest streak on record.

“The number of homes for sale remains very low and continues to decline compared to last year, keeping the high rate of sales. In turn, list prices re-accelerated from the reprieve experienced in the fall of 2021, hitting a new high of $392,000 in February,” George Ratiu, head of economic research for Realtor.com, said in a statement. press before the results. “For buyers looking for a home, the higher price came at the same time that accelerating inflation not only took more out of every paycheck, but also drove up mortgage rates.”

Mortgage interest rates have jumped more than half a point in two weeks – the biggest two-week jump since June 2009. The rate on the average 30-year fixed-rate mortgage (the most common home loan) jumped to 4.42%, from 4.16% a week ago , based on Freddie Mac.

“Certainly, with mortgage rates up more than 100 basis points over the past year and now at their highest levels since 2019, real estate activity is likely to slow going forward,” analysts said. Deutsche Bank in a research note ahead of the results.

In February 2022, rising mortgage rates and sustained price appreciation led to a 28% year-over-year increase in mortgage payments, according to the NAR. Yun expects mortgage rates to be around 4.5% to 5% for the rest of the year.

“Soaring house prices combined with rising mortgage rates can easily translate into an additional $200-300 in monthly mortgage payments, which is a major strain for many families already on tight budgets,” he said. he declares. Yun expects mortgage rates to be around 4.5% to 5% for the rest of the year and expects home sales to be down around 7% in 2022 compared to 2021.

Yun noted that homebuyers should try to lock in their mortgage interest rates now if they’re shopping for a new home.

Amanda Fung is a staff writer at Yahoo Finance. Follow her on Twitter: @amandafung

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