Pending home sales in March fell 5.2% m/o/m, worse than the forecast of up .8%. Weakness was seen in all regions except down South. The NAR is blaming the limited inventory choices of existing homes which is certainly the case with home builders gaining market share. Their chief economist said “The lack of housing inventory is a major constraint to rising sales. Multiple offers are still occurring on about a third of all listings, and 28% of homes are selling above list price. Limited housing supply is simply not meeting demand nationally.” According to Bankrate, the average 30 yr mortgage rate averaged 6.97% in March.
Bottom line, what a bizarre housing market we’re in. After a 40% rise in home prices over the past two years and a doubling in mortgage rates and home prices are barely budging and we’re seeing bidding wars for homes. This doesn’t point to a housing market that is ‘hanging in there’ but a polluted one where the Fed has locked in millions of homeowners that are reluctant to sell and trade in their low cost mortgage. This also creates a more immobile country where people are stuck in place because of affordability issues. It also sucks for first time buyers who are seeing no relief on the pricing side to mitigate the near 7% mortgage rates on offer and while rental price gains are clearly cooling, they are still up dramatically over the past few years.
Pending Home Sales