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In the West, Midwest, and Northeast, pending sales hobbled along near record-lows. Housing demand got shot in January. Prices are just way too high.
By Wolf Richter for WOLF STREET.
Here we go again, with another record low in demand: Pending home sales – a forward-looking indicator of “closed sales” of existing homes to be reported over the next couple of months – dropped by another 4.6% in January from December, seasonally adjusted, and carved out a new all-time low in the data going back to 2010, according to the National Association of Realtors today. Compared to the January in prior years:
- Jan. 2024: -5.2%
- Jan. 2023: -13.4%
- Jan. 2022: -35.5%%
- Jan. 2021: -41.7%
- Jan. 2020: -35.1%
- Jan. 2019: -31.4%.
The dive to a new record low was driven by the South, the largest housing market in the US in terms of transactions, where pending sales plunged to a new record low, and where inventories are now ballooning (historic data via YCharts):
The Buyers’ Strike continues because prices are too high – “elevated,” as the NAR called them today, while blaming them and mortgage rates for this situation – after shooting up by 50% or more within a few years.
Pending sales have been hobbling along the bottom for over two years, and each sign of green shoots, that then got hyped endlessly, was trampled by the buyers’ strike. Prices are simply way too high, and they have frozen demand in the resale market.
Pending sales are based on contract signings and track deals that haven’t closed yet and could still fall apart or get canceled, for all kinds of reasons, such as buyers being unable to afford or even get homeowner’s insurance, a big issue in states where homeowner’s insurance premiums have spiked in recent years. Signed contracts that then fall apart are included in the pending sales here, but are not included in the figures of closed sales reported later.
In the South, pending sales plunged 9.2% month-to-month in February, seasonally adjusted, and were down 8.8% from a year ago, the biggest drops of the four regions.
Compared to highflying 2021, sales collapsed by 45%. Compared to 2019, pending sales plunged by 33%.
And it’s precisely in the South where inventories for sale of new houses and existing homes are now piling up the most (a map of the four Census Regions is posted in the comments below).
Inventories balloon in Florida and Texas.
In terms of transactions, Florida is the largest housing market in the US. Florida and Texas are by far the largest states in the South. So we’ll look at active listings of existing homes in those two states as an indicator of the South.
In Florida, active listings jumped by 34% year-over-year in February, to 168,717 listings, the highest in the data going back to 2016, released today by Realtor.com.
In Texas, active listings jumped by 25% year-over-year in February, to 105,867 listings, the highest for any February in the data going back to 2016 (data via Realtor.com today).
Because listings in Texas are strongly seasonal – lows in January/February, highs in July/August – we look at the stacked chart. The big red squares are January and February 2025.
Pending sales in the West fell by 1.2% month-to-month in February, and by 4.5% year-over-year, continuing to hobble along near the record low of October 2023. Compared to February 2021, pending sales collapsed by 45%. Compared to 2019, they plunged by 34% (historic data via YCharts).
Pending sales in the Northeast ticked up 0.3% month-to-month in February, seasonally adjusted, the only region of the four regions to have experienced this tiny gain. Year-over-year, pending sales were down 0.5%. Compared to February 2021, sales plunged by 37%, and compared to 2019 by 32%. Wobbling along record low levels.
Pending sales in the Midwest fell by 2.0% month-to-month in February, seasonally adjusted, and by 2.7% year-over-year. Compared to February 2021, sales plunged by 34%, and compared to 2019 by 28%. Not a record low, but wobbling along record low levels for over two years.
The plunge in demand in February, as depicted by pending sales, is similar across all four regions, as the above charts show, but it’s worst in the South at the moment, and that’s where also the inventory pileup has started in a serious way.
And inventories of new single-family houses across the nation have ballooned to the highest level since 2007, driven by the South, according to Census Bureau data. Those new houses are now adding to the housing supply, to the surging inventories of existing homes, while homebuilders are piling on mortgage-rate buydowns, price cuts, and incentives to move this inventory:
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The post In the South, Pending Home Sales Plunge to Record Low, just as Inventories in Florida & Texas Balloon. Push US Pending Sales to Record Low appeared first on Energy News Beat.
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