Washington, DC, April 27, 2022 (GLOBE NEWSWIRE) —
- Pending sales fell for the fifth straight month, down 1.2% in March from February.
- Pending sales rose in the Northeast and fell in the other three regions.
- Compared to the previous year, pending sales fell for the tenth consecutive month, by 8.2%, with pending sales falling in all regions.
Pending home sales plummeted in March, meaning contract activity has been down for five straight months, according to the National Association of Realtors®. Month over month, only the Northeast saw an increase in contract signings, while the other three major US regions saw a decline in deals. All four regions reported year-over-year declines in contract activity.
the Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, fell 1.2% to 103.7 in March. Year over year, transactions fell 8.2%. An index of 100 equals the level of contractual activity in 2001.
“The decline in contract signings implies that multiple offers will soon dissipate and be replaced by much calmer and normalized market conditions,” said Lawrence Yun, chief economist at NAR. “As it stands, sudden and large increases in mortgage rates have reduced the pool of eligible buyers, which in turn has reduced buying activity.
“The aspiration to buy a home remains, but affordability has become a major limiting factor.”
Yun expects the 30-year fixed mortgage rate to reach 5.3% by the fourth quarter, mortgage rates to average 4.9% in 2022 and 5.4% by 2023.
It predicts inflation to average 8.2% in 2022, although it will start to moderate to 5.5% in the second half of this year.
In March 2022, rising mortgage rates and sustained price appreciation led to a 31% year-over-year increase in mortgage payments.
“Overall existing home sales this year appear to be down 9% from last year’s blistering pace,” Yun said. “Home prices are not likely to decline nationally, but price gains will steadily slow so that the median home price in 2022 is likely to rise 8% from last year.”
As costs have skyrocketed for existing and new homes, rental properties have also seen their monthly payments increase, a turnaround that Yun says will lead to more tenants exploring the property.
“Rapidly rising rents will encourage tenants to consider buying a home, although higher mortgage rates present challenges,” Yun said. “Strong rent growth will nevertheless lead to a boom in multi-family housing starts, with growth of more than 20% this year.”
He predicts that the unemployment rate will average 3.7% in 2022 and estimates that gross domestic product will increase by 2.8%.
With rising mortgage rates, Yun added that single-family home builders will be more cautious, despite the current tight inventory conditions, saying, “I expect this to lead to a construction increase of less than 5 percent. “.
Regional Breakdown of March Pending Home Sales
Month over month, the North East PHSI rose 4.0% to 89.3 in March, down 9.2% from a year ago. In the Midwest, the index fell 6.1% to 94.7 last month, down 4.8% from March 2021.
Pending home sales transactions in the South fell 0.9% to an index of 125.8 in March, down 9.5% from March 2021. The index in the West fell 0.2% in March to 89.8, down 8.4% from a year earlier.
The National Association of Estate Agents® is America’s largest trade association, representing over 1.5 million members involved in all aspects of the residential and commercial real estate industries.
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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not been completed, although the sale is usually finalized within one or two months of signing.
Pending contracts are good early indicators of upcoming sales closes. However, the time span between current contracts and completed sales is not the same for all home sales. Variations in the length of the process from contract in progress to sale completed can be caused by issues such as buyer’s difficulty obtaining mortgage financing, home inspection issues, or valuation issues. .
The index is based on a sample that covers approximately 40% of data from multiple listing services each month. When building the index model, it was shown that the level of monthly sales contract activity corresponds to the level of closed existing home sales over the following two months.
An index of 100 equals the average level of contractual activity during the year 2001, which was the first year to be examined. Coincidentally, the volume of existing home sales in 2001 fell into the 5.0 to 5.5 million range, which is considered normal for today’s US population.
REMARK: Existing home sales for April will be released on May 19. The next pending home sales index will be May 26; all release times are 10:00 a.m. ET.
Information about NAR is available at www.nar.realtor. This press release and others are posted on the NAR Newsroom at www.nar.realtor/newsroom. Statistical data from this release, as well as other tables and surveys, are displayed in the “Research and Statistics” tab.