“Improving affordability conditions have yet to induce more buying activity”: National Association of Realtors.
By Wolf Richter for WOLF STREET.
January was bad, following the plunge in December. And prior months were revised lower. Pending home sales, tracking the number of contracts signed in January, declined by 0.8% seasonally adjusted from the downwardly revised December, to the lowest level on record in the data by the National Association of Realtors, which goes back to mid-2010. Compared to January 2011, during the Housing Bust and the first January in the data series, pending sales were down by 20%.
“Improving affordability conditions have yet to induce more buying activity,” the NAR stated.
Pending home sales compared to the Januarys in prior years (historic data via YCharts):
- 2025: -0.8% (year-over-year)
- 2024: -4.8%
- 2023: -13.0%
- 2022: -35.2%
- 2021: -41.4%
- 2020: -34.8%
- 2019: -31.1%
- 2018: -32.9%.
Pending sales dropped sharply in the South and in the Northeast but rose in the West and Midwest on a month-to-month basis, seasonally adjusted, see charts further below. This comes after the drop in December in all four regions.
The metric of pending sales tracks contracts that were signed in January but that haven’t closed yet and could still get canceled because buyers cannot afford homeowner’s insurance, or cannot sell their own home, or for other reasons. The rate of cancellations has been running high.
Pending home sales by region.
A map of the four Census Regions is posted in the comments below.
In the South, pending sales fell by 4.5% in January from December, seasonally adjusted, following the drop in December.
Compared to the Januarys of prior years:
- 2025: +4.0% (year-over-year)
- 2024: -3.9%
- 2023: -12.2%
- 2022: -35.9%
- 2021: -42.1%
- 2019: -29.4%.
In the Northeast, pending sales dropped by 5.7% month-to-month, to the second-worst level of sales on record.
Compared to the Januarys of prior years:
- 2025: -8.3% (year-over-year)
- 2024: -8.6%
- 2023: -13.5%
- 2022: -31.0%
- 2021: -42.5%
- 2019: -37.3%.
In the Midwest, pending sales rose by 5.0% in January from December, seasonally adjusted, to the third-lowest level on record, after the 12.7% plunge in December to a record low in the data going back to mid-2010.
Compared to the Januarys of prior years:
- 2025: -3.3% (year-over-year)
- 2024: -5.1%
- 2023: -14.9%
- 2022: -33.1%
- 2021: -36.0%
- 2019: -29.3%.
In the West, pending sales rose by 4.3% in January from December after the 10.6% plunge in December, seasonally adjusted.
Compared to the Januarys of prior years:
- 2025: +0.3% (year-over-year)
- 2024: -4.0%
- 2023: -11.9%
- 2022: -39.1%
- 2021: -45.1%
- 2019: -33.5%.
The cause of the housing market being this frozen and refusing to thaw is related to the ultra-low mortgage rates of 2020-2022 that ended up exploding home prices to where they’re too high now; and then when those ultra-low mortgage rates went away, they “locked in” homeowners that had those ultra-low mortgage rates who now cannot afford to move or don’t want to move because it’s not worth the extra monthly expense.
A substantial segment of the housing market – people moving and putting their home on the market and buying another home – has been frozen in this way for a fourth year now. Part of the plunge in sales compared to the years before the pandemic is related to this effect, with these people, as buyers and sellers, having vanished from the market.
The unwinding of the ultra-low mortgage rates is occurring, but very slowly, and the lock-in effect is gradually loosening: “Locked-in” Homeowners Nevertheless Pay Off Below-4% Mortgages: their Share Drops to Lowest since Q4 2020].
In case you missed it: Single-Family & Multifamily Construction: Bring on the Supply just as Population Growth Slows to a Crawl
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The four Census Regions of the US:
This spring season will be interesting, wonder how many will pin their hopes of a spring turnaround and we’re back baby momentum come spring.
This continue decline continues to remind us all the Mexican standoff is well and alive especially if you overlay the price change chart for market such as SoCal. Sales tanking and yet hubris sky high asking price still rampant across OC and LA…as they say, housing move slow but one has to wonder if and when this dam will ever break….
“Improving affordability conditions have yet to induce more buying activity,” the NAR stated.
Hmmmmm…..,prices still too high/rising insurance/property taxes/home repair costs ect.
I KNOW the nar would not lie but they really do seem to be very dumb.
After jumping like 40% last year, my homeowner’s insurance jumped another 10% this year. I’ve shopped around and it is the same price.
Not sure what I’m doing wrong. It is getting ridiculous at this point.
I doubt it’s you. I believe it’s the insurance companies. They liked the increases they levied during covid, and until we rebel they’ll continue. Perhaps Trump should bash them and open interstate competition. its time!
I experienced the same issue. I did have mine raise the deductible to the highest amount they would allow which did lower my annual payment a bit. Of course, that may be dependent on state, location, property value, etc. When checking around I generally found $5000 to be the max that many would quote but if someone know of other carriers that may allow higher, I would love to know.
NAR needs to keep a dialogue going that it’s still glass half full or it’ll ruin the industry even more.
Paging Lawrence Yun….your propaganda is needed in aisle 2…
Another stock Klarna (KLAR) qualified for the Imploded Stock list today, this one was incredibly hyped before the IPO and has totally collapsed.
Thank you to the Fed for the golden handcuffs of the 3% 30-year mortgage!
Situation not changing anytime soon