The rebound in existing US home sales during the first month of 2024 may prove fleeting, at least if you go by contract activity.

Pending transactions dove nearly 5% last month, an update released on Thursday showed.

Economists weren’t even close on this one. Consensus expected a 1.5% gain. The range of estimates from two-dozen people who are supposed to know something about houses was -3% to 4.6%.

The drop counted as the largest since August, when the onset of what would ultimately be a three-month selloff at the long-end of the Treasury curve pushed up mortgage rates and undercut sentiment.

Note that December’s big jump in pending transactions anticipated January’s rebound in existing home sales. Now we’re staring at a hangover, apparently. Contract signings ticked higher in the Northeast and West, but fell sharply (more than 7%) in the Midwest and South.

Mortgage applications fell in the week to February 23, the MBA said, in its latest update. Rates were effectively unchanged at 7.04% after a big jump the prior week, catalyzed in part by the CPI overshoot (ironic considering confusion around the OER print).

The 30-year fixed is 25bps above where it stood at the end of last year. That’s having an impact on the marginal buyer. “Higher rates in recent weeks have stalled activity,” MBA chief economist Mike Fratantoni remarked.

The NAR’s Lawrence Yun echoed that assessment on Thursday. “The job market is solid, and the country’s total wealth reached a record high due to stock market and home price gains [a] combination [that is] favorable for home buying [but] consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales,” he said.

Of course, a dearth of available resale properties is also an impediment. “The lack of existing inventory is the primary constraint to increases in purchase volume,” Fratantoni went on. “However, mortgage rates above 7% sure don’t help.”