Sales sag in all regions, plunge the most in the Midwest, drop to lowest for June in the South. Demand stuck in the deep-freeze.
By Wolf Richter for WOLF STREET.
Pending home sales plunged by 5.4% in June from May, seasonally adjusted, to the lowest level for any June on record, down 0.3% from the abysmally low levels in June last year, down 36% from June 2021, 37% from June 2020, 34% from June 2019, 32% from June 2018, and down 20% from June 2011, during the Housing Bust, according to data from the National Association of Realtors. Its data only goes back to mid-2010.
This is now the fourth year that demand has been in the deep-freeze, amid the highest supply of existing single-family homes in 10 years and of existing condos in 14 years.
Pending home sales fell in all regions, with the index plunging by the most in the Midwest, plunging to record lows in the West, and plunging in the South to the lowest level for any June and the sixth-lowest for any month in the data’s history going back to mid-2010 (historic data via YCharts):
The metric of pending home sales tracks contracts that were signed in June 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 at the top of the comments below.
In the South, pending sales plunged by 4.1% in June from May to the lowest June on record, the sixth lowest level of any month on record, seasonally adjusted.
Compared to June in prior years:
- 2025: -0.9% (year-over-year)
- 2024: -2.6%
- 2023: -7.0%
- 2022: -20.7%
- 2021: -35.6%
- 2019: -32.1%.
In the West, pending sales fell by 4.7% in June from May, seasonally adjusted, to the record low in the data, shared with October 2023.
Compared to June in prior years:
- 2025: -1.1% (year-over-year)
- 2024: -6.3%
- 2023: -5.0%
- 2022: -19.6%
- 2021: -44.8%
- 2019: -42.3%.
In the Midwest, pending sales plunged by 8.9% in June from May, seasonally adjusted, the biggest drop among the four regions, and more than undoing the increase in the prior month. Back to the middle of the deep-freeze range. December was the record low in the data going back to mid-2010. Compared to the abysmal levels in June last year, pending sales were up by 0.3%.
Compared to June in prior years:
- 2025: +0.3% (year-over-year)
- 2024: 0%
- 2023: -4.0%
- 2022: -21.2%
- 2021: -31.8%
- 2019: -30.0%.
In the Northeast, pending sales fell by 3.0% in June from May. Though that was a substantial decline, it was the smallest decline among the four regions.
Compared to June in prior years:
- 2025: +2.2% (year-over-year)
- 2024: +1.4%
- 2023: -0.2%
- 2022: -18.6%
- 2021: -33.2%
- 2019: -31.9%.
Mortgage rates in June were a little lower than now, averaging around 6.48%. In the latest reporting week, they climbed to 6.55%, according to Freddie Mac today.
Mortgage rates have been in this range since September 2022, and mostly higher than that in the decades before 2009 before the Fed kicked off QE and its zero-interest-rate policy. And the housing market – buyers, sellers, and everyone in between – needs to get used to those rates.
These mortgage rates are not high in a historic context. They’re only high in the context of the years of QE when the Fed purchased trillions of dollars of Treasury securities and mortgage-backed securities in order to artificially repress mortgage rates. This immense bout of money printing eventually triggered the worst inflation in 40 years and the worst home-price explosion on record, leading to home prices that are now too high and are a liability for the economy. Those too-high home prices are part of the hangover that the housing market is now trying to get over.
In case you missed it: Supply of Existing Single-Family Homes Jumps to 10-Year High, Condo Supply to 14-Year High. Sales Slip Deeper into Deep Freeze. Mortgage Rates Rise to 6.49%
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the mug to find out how:
The four Census Regions of the US:
Can’t stop laughing at all the idiot RRE bagholders. I’m taking delivery on a futures contract for hot buttered popcorn at the CME so I can enjoy the spectacle in style.
I wonder if this is the new normal or will sales bounce back to some higher level at some point? Maybe we are entering a period where there will be just less people moving around. I have assume at this point people have realize mortgage rates are not going back to 3%, I guess they could be hoping for 5%?
Or prices could go down.
Prices have already gone down a lot in many markets.
I don’t see how they can ever get back to 5%. Assuming a mortgage rate spread of 2.3% on top of the 10 year rate, then in order to get to 5%,
then ten year would have to go down to 5% – 2.3% = 2.7%. With the federal debt, I don’t see the bond market settling for 2.7% on 10 year treasuries any time in the near future.
Outstanding! As we all know, the only way affordability will return to homes over time & outside of a recession is higher for longer.
While I’m certainly not a fan of 3.5% headline inflation, I’m also not a fan of going 17 years without a real recession that has baked inflation into every part of the economy. IMHO, all sorts of businesses are raising prices more than what’s necessary to cover increased costs. From bank profits, builder profits, technology profits, & all sorts of other mid to larger corporate profits, something has got to give.
The Fed has been doing stealth QE now for almost 8 months, causing the money supply to rise which is just nuts.
I’m just flabbergasted at how much all this AI spending is propping up the economy and likely sending us down the path towards two very bad outcomes over the next 3-5 years: much higher energy costs & labor disruptions.