Pending home sales during January dropped by 0.8% from the prior month and by 0.4% year-over-year, according to the National Association of Realtors (NAR).
Month-over-month pending home sales rose in the Midwest and West but declined in the Northeast and South. Year-over-year pending home sales took an upswing in the South and West but took a downturn in the Northeast and Midwest.
“Improving affordability conditions have yet to induce more buying activity,” said NAR Chief Economist Lawrence Yun. “With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates. Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers this year compared with last year.”
Yun added, “Unless housing supply increases, these additional potential buyers becoming active in the market could simply push up home prices. This will put increasing pressure on affordability, which is why it is critical to increase supply by building more homes. Fortunately, the House of Representatives recently passed the Housing for the 21st Century Act with strong bipartisan support, an important signal that addressing the nation’s housing shortage remains a shared priority. The legislation is a meaningful step toward expanding housing supply and removing barriers that make it harder for Americans to achieve homeownership.”
