A mid-week update on the marquee gauge of contract activity across America’s still-beset resale housing market was — and I’ll be polite — not great.
I should preface this by noting that pending home sales as measured by the NAR came into last month riding a streak of four consecutive gains. Given the myriad challenges still bedeviling the market, it’s not surprising to see that streak interrupted.
That said, the 9.3% decline the NAR reported Wednesday for December counted as a huge downside surprise to consensus, which expected only a slight drop.
“The housing sector is not out of the woods yet,” NAR Chief Economist Lawrence Yun remarked. I’ll say. The decline illustrated above was the largest since 2020, and it served to “dampen the short-term outlook,” as Yun put it.
It goes without saying that you have to be cautious about extrapolating from housing figures collected during the winter holidays. Efforts to control for the seasonal aside, it’s virtually impossible to get a clean read on the state of the housing market during a month when it’s cold and families are disinclined to move.
Still, it’s notable that contract signings fell on a YoY basis too despite mortgage rates that were between 30bps and 50bps lower versus December of 2024.
Wednesday’s MBA update showed overall application activity rose more than 14% in the week to January 16, spurred on by refis. The 30-year fixed slipped to 6.16%, the lowest since September of 2024.
“Refi applications accounted for more than 60% of applications, and the average loan size also moved higher,” MBA VP Joel Kan said, in perfunctory color accompanying the release.
Donald Trump’s pulling out all the stops to address housing affordability ahead of the mid-terms, an effort he spent a few minutes discussing in Davos on Wednesday between complaining about Denmark’s reluctance to cede Greenland.
Meanwhile, Redfin released its latest data on the buyer-seller imbalance. Sellers now outnumber buyers by an astounding 47%, up dramatically from the prior month.
There’s the updated chart. As the accompanying editorial made clear, nobody’s “winning” here. A lot of sellers are actually underwater, having bought in expensive locales at the height of the boom, and are now facing the prospect of losses. As for buyers, they can’t make the math work even when homeowners are willing to sell at a loss.
Lily Katz’s refrain was familiar where that means verbatim. “It’s only a buyer’s market for those who can afford to buy,” she wrote. A Redfin agent who spoke to Katz for the piece said that although some sellers are resigned to “the fact that the market has shifted in buyers’ favor, a lot are in denial and won’t budge on price.”
If you’re a seller and you’re determined not to accept the reality illustrated so poignantly in the chart, that’s your right. But don’t complain when your house doesn’t sell.
Coming full circle, the NAR’s Yun said Wednesday he’ll be “watching the data in the coming months to determine whether” December’s poor numbers were “a one-month aberration or the start of an underlying trend.”
