In the West, Midwest, and Northeast, pending sales hobbled along near record-lows. Housing demand got shot in January. Prices are just way too high.
Here we go again, with another record low in demand: Pending home sales – a forward-looking indicator of “closed sales” of existing homes to be reported over the next couple of months – dropped by another 4.6% in January from December, seasonally adjusted, and carved out a new all-time low in the data going back to 2010, according to the National Association of Realtors today. Compared to the January in prior years:
- Jan. 2024: -5.2%
- Jan. 2023: -13.4%
- Jan. 2022: -35.5%%
- Jan. 2021: -41.7%
- Jan. 2020: -35.1%
- Jan. 2019: -31.4%.
The dive to a new record low was driven by the South, the largest housing market in the US in terms of transactions, where pending sales plunged to a new record low, and where inventories are now ballooning (historic data via YCharts):
The Buyers’ Strike continues because prices are too high – “elevated,” as the NAR called them today, while blaming them and mortgage rates for this situation – after shooting up by 50% or more within a few years.
Pending sales have been hobbling along the bottom for over two years, and each sign of green shoots, that then got hyped endlessly, was trampled by the buyers’ strike. Prices are simply way too high, and they have frozen demand in the resale market.
Pending sales are based on contract signings and track deals that haven’t closed yet and could still fall apart or get canceled, for all kinds of reasons, such as buyers being unable to afford or even get homeowner’s insurance, a big issue in states where homeowner’s insurance premiums have spiked in recent years. Signed contracts that then fall apart are included in the pending sales here, but are not included in the figures of closed sales reported later.
In the South, pending sales plunged 9.2% month-to-month in February, seasonally adjusted, and were down 8.8% from a year ago, the biggest drops of the four regions.
Compared to highflying 2021, sales collapsed by 45%. Compared to 2019, pending sales plunged by 33%.
