United States Pending Home Sales 2022
The Pending Home Sales Index is a leading indicator of housing activity. It measures housing contract activity and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. When a seller accepts a sales contract on a property, it is recorded into a Multiple Listing Service (MLS) as a “pending home sale.” Most pending home sales become home sale transactions, typically one to two months later. The National Association of Realtors collects pending home sales data from MLSs and large brokers.
According to the National Association of Realtors, pending house sales, a measure of signed contracts on existing homes, decreased 10.2% in September compared to August, which was significantly worse than anticipated. Economists had anticipated a 4% drop. The decline in sales was 31% year-over-year.
This is the lowest level of the pending sales index since June 2010, excluding April 2020, during the onset of the Covid pandemic. September’s contract signings also bring the pending index below the 100-level mark for the sixth consecutive month. The 100 level is based on a 2001 benchmark and is consistent with existing home sales above the 5 million mark.
In the first two years of the pandemic, mortgage rates stood at all-time lows, prompting realtors to refer to the rapid rise in mortgage rates. According to Mortgage News Daily, the average rate on the popular 30-year fixed mortgage was exactly around 3% at the beginning of this year but increased rapidly to surpass 6% in June. In September, when these contracts were signed, the rate had surpassed 7%, after experiencing a slight decline in July and August.
Source: NAR
Also Read: Existing Home Sales Drop Trends
Higher interest rates have resulted in far fewer buyers and even fewer sellers in 2022. With a 20% down payment, the monthly payment on a median-priced home is now close to $1,000 more than it was in January due to the increase in interest rates. Although housing prices are beginning to cool and even fall in certain local housing markets, the dip is insufficient to offset the rise in interest rates. Since the beginning of the pandemic, home prices have increased by more than 40 percent, primarily due to historically low mortgage rates.
Key Highlights
Pending home sales dropped for the fourth straight month, down 10.2% from August.
Month-over-month, contract signings pulled back in all four major U.S. regions.
Pending sales decreased in all regions compared to one year ago.
“Persistent inflation has proven quite harmful to the housing market,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.”
Pending Home Sales Regional Breakdown Sept 2022
Northeast pending home sales decreased 16.2% month-over-month and decreased 30.0% year-over-year. In the Midwest, month-to-month pending sales were down 8.8% and year-over-year sales were down 26.0%. In the South, pending sales were down 8.1% for the month and were down 30.0% from the previous year, while in the West, the most costly region in the country, pending sales decreased 11.7% for the month and were down 38.7% from the previous year.
The Pending Home Sales Index is a leading indicator of housing activity. It measures housing contract activity and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. When a seller accepts a sales contract on a property, it is recorded into a Multiple Listing Service (MLS) as a “pending home sale.” Most pending home sales become home sale transactions, typically one to two months later. The National Association of Realtors collects pending home sales data from MLSs and large brokers.
Source: NAR
Pending Home Sales Trends in 2022 (June to August)
Pending home sales in the US sank 8.6% MTM in June of 2022, after increasing 0.4% in May, and much more than market forecasts of a 1.5% drop, as escalating mortgage rates and housing prices impacted potential buyers. Pending sales retreated in all four major regions: Midwest (-3.8%), Northeast (-6.7%), South (-8.9%), and West (-15.9%).
Year-over-year, transactions shrank 20%. According to NAR, buying a home in June was about 80% more expensive than in June 2019. Nearly a quarter of buyers who purchased a home three years ago would be unable to do so now. “Home sales will be down by 13% in 2022 but should start to rise by early 2023”, Yun added.
NAR released a summary of pending home sales data showing that July’s pending home sales pace weakened by 1.0% last month and fell 19.9% from a year ago. The last time the index was that low was in April of 2020 during the pandemic, and the index was 71.6. Pending sales represent homes with a signed contract to purchase but which have yet to close. They tend to lead existing-home sales data by 1 to 2 months.
All four regions showed double-digit declines from a year ago. The West had the most significant dip of 30.1%, followed by the South with a drop in contract signings of 20%. The Northeast fell 15.4%, followed by the Midwest with the smallest decline of 13.4%.
Pending home sales fell 2% in August as the housing market continued its slowdown amid rising mortgage rates and inflation, the National Association of Realtors reported on Wednesday. The drop was more than the forecast 1.5% decline and brings sales down 24.2% from a year ago. All four regions showed double-digit declines from a year ago. The West had the most significant dip of 31.3%, followed by the South with a drop in contract signings of 24.2%. The Midwest fell 21.1%, followed by the Northeast with the smallest decline of 19.0%.
<<<Also Read: Will Housing Market Crash Again?>>>
Source:
https://www.nar.realtor/research-and-statistics/housing-statistics/pending-home-sales
https://www.nar.realtor/newsroom/pending-home-sales-waned-10-2-in-september
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