Pending home sales tumbled in August, a bad omen for already depressed existing home sales.
Contract signings dove 7.1% last month, the NAR said Thursday. It was the largest decline in nearly a year.
Out of more than two-dozen economists who ventured a guess, nobody was close. The most pessimistic estimate saw a 5% drop.
Sales fell in every region on both a MoM and YoY basis.
Although depressed inventories are obviously a big part of the story, the renewed rise in mortgage rates is now garnering just as much attention in the color that accompanies the incoming data.
“Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers,” Lawrence Yun, NAR chief economist, said Thursday.
Rates rose 10bps last week to the highest since December of 2000, according to the MBA’s index. Home prices, meanwhile, hit new records midway through the summer, updates on the key national gauges showed. Suffice to say buyers are being squeezed from all sides. And it’s getting worse.
“Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets,” Yun went on.
Last week, Redfin data showed new listings were down nearly 7% YoY through September 17, while pending sales were lower by nearly 13%. Housing payments are more than 12% higher than they were this time last year, at $2,661 a month, a record.
“With monthly housing payments at an all-time high, would-be buyers are waiting for homes to become more affordable,” Dana Anderson remarked.
Although “slightly” more homeowners are listing their properties, Anderson said “the total number of homes for sale is down 16%, as many homeowners stay put to keep relatively low mortgage rates.”
Yun was blunt on Thursday. “It’s clear that increased housing inventory and better interest rates are essential to revive the housing market,” he said.
As Marko Kolanovic put it this week, the US housing market is “effectively frozen.”
