U.S. home buying slows below 2020 U.S. pace – Orange County Register
Has the US real estate market run out of steam?
The pace of pending home sales nationwide declined the most in February since April, as rising house prices, more expensive loans and a shortage of available properties deterred buyers.
The National Association of Realtors’ pending home sales index fell 10.6% from the previous month to 110.3, the lowest reading since May, according to data released Wednesday. Contract signatures decreased 2.7% compared to the same period in 2020 on an unadjusted basis.
Soaring house prices and low inventories are slowing the pandemic-era real estate boom, as evidenced by declining contract signatures in all four regions of the United States. In addition, a harsh winter limited purchases in February. At the same time, the average rate on a 30-year fixed-rate mortgage has increased, which could affect buyer demand in the coming months.
“Demand to buy a home is rampant, multiple offers are prevalent, and the days to market are quick, but deals don’t click due to record stock,” said Lawrence Yun, economist. chief of the NAR, in a statement.
By region, contract signatures fell the most in the South, where winter storms reduced business activity and caused pending home sales to drop 13%. In the Midwest, sales were down 9.5% and in the Northeast, they were down 9.2%. In the West, they fell 7.4%.
These aren’t just slim choices. Prices are skyrocketing. The S&P CoreLogic Case-Shiller House Price Index, released on Tuesday, showed an 11.2% jump in January from a year ago – the fastest in 15 years, after rising 10.4 % in December.
Funding is also more expensive. After falling to an all-time low of 2.65% in January, the 30-year fixed-rate mortgage hit 3.17% on March 25, its highest level in more than nine months. While borrowing costs are expected to continue to rise, NAR’s Yun said he doesn’t expect rates to exceed 3.5% this year.
Contract signatures are seen as a barometer of the purchases that will take place in the next two months. Previously, the Commerce Department reported that home construction fell sharply, falling 10.3% in February due to harsh winter conditions across much of the country. Applications for new building permits, seen as a good indication of future activity, fell for the first time since October.
Economists are optimistic about the housing recovery in the coming months. Growing demand has been fueled by Americans who have been locked in as the coronavirus pandemic extends beyond the one-year mark.
Bloomberg news and Associated Press contributed to this report.