US Pending Home Sales Hit Historic Low Amid Rising Mortgage Rates and Prices
Pending home sales in the US dropped to a record low in January due to high mortgage rates and home prices, exacerbated by severe weather.
Overview
In January, pending home sales in the US fell 4.6% to an all-time low, driven by increased mortgage rates averaging between 6.91% and 7.04%, and unprecedented home prices. The National Association of Realtors reported a 5.2% year-over-year decline in transactions, particularly impacted in the South. Despite some improvement in home inventory, the overall market remains sluggish, raising concerns about affordability as annual home prices surged for the 19th consecutive month. Economists suggest weather may have affected buyer activity but expect sales to adjust soon.
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Analysis
- Pending home sales in the US declined to an all-time low in January, attributed to factors such as high mortgage rates and record-high home prices, which strain affordability for buyers.
- Despite weather conditions possibly affecting buyer activity, the general trend shows a significant decrease in pending transactions across various regions, indicating ongoing challenges in the housing market.
- The increase in home inventory may help future sales, but regional disparities remain that hinder access for buyers in many areas.
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Associated Press·4M·FAQ
Pending home sales in January 2025 fell by 4.6% compared to the previous month.
It is unclear if the severe weather directly impacted pending home sales, but economists suggest it might have contributed to fewer buyers in the market, potentially leading to increased sales activity in upcoming months.
The South experienced the largest year-over-year decline in pending home sales, with an 8.8% decrease.
High mortgage rates have strained housing affordability, as the monthly mortgage payment on a $300,000 home increased by an extra $50 to $1,590 compared to a year ago.
History
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