Pending home sales lagged unexpectedly for the fourth consecutive month.
Pending Home Sales Slumped in February
Rather than having one culprit, limited inventory, poking its sharp elbow into pending homes sales, the real estate market is now faced with an additional troublemaker, increasing borrowing costs.
The National Association of REALTORS’® (NAR) Pending Home Sales Index dropped -4.1% m/m to an almost two-year low of 104.9.
Please choose one answer:
1) I am ready to join EXP Realty.
2) I am interested in EXP Realty and need more info.
3) I am not interested in EXP Realty.
* If you answered “#1” congratulations. You are about to join the fastest-growing real estate company in the world. Tim and Julie Harris are inviting you to join them at EXP Realty. Text Tim directly for the next steps: 512-758-0206. (text only please)
* If you answered “#2” please watch the videos and check out the other intel on this site. http://whylibertas.com/harris .
* If you answered ‘#3’ no worries. You will want to check out whylibertas.com/harris so you can at least know what EXP Realty is and why so many agents are moving to EXP.
Lawrence Yun, NAR’s chief economist, said, “Pending transactions diminished in February mainly due to the low number of homes for sale. It is still an extremely competitive market, but fast-changing conditions regarding affordability are ahead.”
Mortgage Payments Now Reflecting Market Conditions
Limited inventory continues to push asking prices higher. Interest rates on a typical 30-year fixed mortgage stood at a three-year high of 4.5% (and rising) in March. The Federal Reserve raised interest rates for the first time since 2018 in mid-March and is expected to increase rates between 0.25% – 0.50% five more times during this year. And central bankers are projected to continue tightening lending standards in light of a four-decade high inflation rate.
The result of all these provocative market conditions? Higher rates and sustained price appreciation have driven up mortgage payments +28% y/y, according to NAR.
Additional Causal Results
“The surge in home prices combined with rising mortgage rates can easily translate into another $200 to $300 in mortgage payments per month, which is a major strain for many families already on tight budgets,” said NAR’s Yun.
Pending Sales by Region
Pending contract signings looked like this regionally:
- Midwest – -6%
- West – -5.4%
- South – -4.4%
- Northeast – +1.9%
Overall pending home contract sales fell -5.4% y/y.
Existing-homes sales dropped to a six-month low in February as well.
Grim Signs for Spring Selling Season?
The jump in mortgage rates is coming at the housing market’s busiest season. Rates began rising in January and continued doing so in February. Now, the average rate on the 30-year fixed mortgage is more than a full percentage point higher than it was during this time period last year.
The median monthly payment on a new mortgage jumped +8.3% in February compared with January and is +22% higher than it was in February 2021, according to the Mortgage Bankers Association (MBA). The MBA added that the monthly mortgage payment for borrowers on the lower end of the market is up nearly +10% m/m.
“The 30-year fixed-rate mortgage spiked 73-basis points from December 2021 through February 2022. Together with increased loan application amounts, a mortgage applicant’s median principal and interest payment in February jumped from $127 from January and $337 from one year ago,” said Edward Seiler, MBA’s associate vice president of housing economics.
URGENT: Are You Worried About Having A Slower Start To The Year? Don’t Hit The Panic Button, Learn How To Have Massive Success In A Shifting Market. When You Attend This Exclusive Training You Will Learn 17 Surprising Secrets Of The Top 100 $ Millionaire Agents. Claim Your FREE Spot Now. After You Have Attended This Event You Will Experience A Huge Feeling Of Relief Knowing You Will FINALLY Laugh At Your Money Worries – You Will Have Your Own Personalized 2022 Step-By-Step Business And Lead Generation Plan. Learn Now How To Generate 100’s of Motivated Leads for FREE, Without Coming Off As A Pushy Salesperson and Losing Your Soul. You Will Soon Know How To Become One of the 1000s of Agents Making HUGE Money In This Changing Market. Claim your FREE spot now. YES, I Want To Attend The FREE Webinar! <——Click To Register
P.S. Free Webinar, Limited Space. Less Than 300 Spots Still Available.
Thanks to Bloomberg and CNBC.