Is the real estate industry beginning to crack? After unexpectedly plunging in January, pending home sales were expected rebound very modestly in February (despite both new- and existing-home-sales tumbling as mortgage rates soar). The analysts were very wrong as pending home sales puked 4.1% MoM (after a downwardly revised drop of 5.8% MoM in January). That is the fourth straight monthly drop. You heard it right. 4 Months in a row now.
A recent report showed a measure of homebuilders’ sales expectations for the next six months slumped in March to the lowest since June 2020 amid growing concerns over the combination of rising construction costs and higher interest rates.
“Pending transactions diminished in February mainly due to the low number of homes for sale,” Lawrence Yun, NAR’s chief economist, said in a statement.
“It is still an extremely competitive market, but fast-changing conditions regarding affordability are ahead.”
And we suspect this is far from over as mortgage applications in the last week tumbled once again.