Pending home sales fell 4.1% in February from the previous month and 5.4% from the same period last year, according to the National’s Pending Home Sales Index. Association of Realtors.
Pending home sales fell in February, marking the fourth consecutive month of depressed contract signings, according to the National Association of Realtors’ Pending Home Sales Index.
Pending home sales fell 4.1% in February from the previous month and 5.4% from the same period last year, the data showed.
Experts attributed the slowdown in the forward-looking indicator used to determine the number of home sales that will be finalized in the coming weeks to the historic shortage of homes for sale.
Pending transactions decreased in February mainly due to the low number of homes for sale,” said Lawrence Yun, chief economist of NAR. “Buyer demand is still intense, but it’s as simple as ‘you can’t buy what’s not for sale.'”
Home prices continue to climb as inventories remain low, and the new challenge of rising mortgage rates gives buyers another problem to grapple with, with mortgage payments rising 28% year over year in February.
“It’s still a fiercely competitive market, but rapidly changing conditions regarding affordability are ahead,” he said. “As a result, home sellers cannot simply increase prices in the coming months, but must assess changing market conditions to attract buyers.”
Rising inflation rates and rising gas prices continue to weigh on the bottom line for potential buyers, Realtor.com Chief Economist George Ratiu said.
“For buyers looking for a home, the rise in prices has come at the same time that accelerating inflation has not only taken more out of every paycheck, but also pushed up mortgage rates. The net effect, especially for first-time buyers, was a reduction in their budgets, which only served to reduce the options available,” Ratiu said in a statement.
Yun predicted mortgage rates would be around 4.5 or 5 percent for the rest of 2022, and for 2022 a 7 percent reduction in home sales from 2021.
“House prices themselves are still on solid ground,” he said. “They could be up about 5% by year end and we should see much smaller gains in the second half.”
Pending home sales were month-over-month in all regions except the North East, which rose 1.9% to 85 on the PHSI, with a 100 on the index representing the level of contract activity in 2021. The South saw pending sales decline 4.4% to 127.2, while the Midwest saw a 6% drop to 99.7, and the West slipped 5.4% to 90 on the index.
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