Home sales

Pending home sales fall for third straight month

Buying a home in the United States was slower than expected in the first month of 2022.

Pending home sales, a leading indicator of the health of the housing market, fell for the third consecutive month. the National Association of Realtors (NAR) Pending Home Sales Index, which tracks the number of homes under contract for sale, fell 5.7% in January from December and 9.5% from the same month a year ago. Contract signings declined in all regions of the United States. The results were well below analysts’ expectations of a 0.2% increase in sales from the previous month and a decline of 1.8% from the same month a year ago, according to estimates. of the Bloomberg Consensus.

“With inventories at rock bottom, buyers are still struggling to find a home,” said Lawrence Yunchief economist of NAR, in a press release.

Total housing inventory at the end of January was 860,000 units, down 2.3% from December and 16.5% from a year ago (1.03 million) – a level record since the NAR began tracking data in 1999 for all home types.

Yun said last month, “This is the lowest inventory in modern history,” adding that the NAR began tracking single-family home inventory in 1982.

“The housing market started 2022 with demand exceeding a record number of unsold homes,” Realtor.com Chief Economist Danielle Hale said in a statement ahead of the results. Compared to last year, January inventory level was down 28.4%, according to data from Realtor.com, and seller participation lagged until this week.

“At the same time, increasing competition in real estate markets – especially in relatively affordable markets hot markets in states like California and North Carolina – suggests that home buyers are serious, propelling home price growth and short times to market,” Hale added.

In addition to record inventories, rising interest rates coupled with soaring house prices are likely factors that contributed to January’s slowdown.

“Given the market situation – mortgages, house prices and inventory – it would not be surprising to see a decline in housing demand,” Yun said, adding that the NAR expects economic conditions be volatile in the coming months. The imminent conclusion of the Federal Reserve’s asset purchase program in March paves the way for higher interest rates, he added.

Last month, mortgage interest rates have started to climb to levels not seen since March 2020, is gradually approaching 4%. Although there has been some pullback from the 30-year fixed mortgage (the most common loan for buyers) — this week slipping to 3.89% from 3.92% a week earlier due to the fall in US Treasuries following Russia’s invasion of Ukraine, rates are still at high levels.

Mortgage rates have “increased by more than a full percentage in the last six months,” said Sam Khater, chief economist at Freddie Mac.

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

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, instagram, Youtube, Facebook, Flipboardand LinkedIn