Pending home sales fell more than 10% in February

The US real estate market is suffering from its lowest bid in history, which is weighing more and more heavily on sales.

Pending home sales, a measure of contracts signed on existing homes, fell 10.6% more than expected in February compared to January, according to the National Association of Realtors. Sales were down 0.5% year over year.

“The demand to buy a home is widespread, multiple offers are prevalent and the days on the market are quick,” said real estate agent’s chief economist Lawrence Yun. “But contracts don’t click due to record inventory.”

There were only 1.03 million homes for sale at the end of February, a drop of 29.5% from February 2020. This is the largest annual decline on record and supply the lowest ever recorded.

Sales now vary considerably depending on the price point, as supply is so low on the low end and more abundant on the high end.

Homes priced over $ 250,000 saw the most active sales, but Yun notes that homes priced over $ 500,000 below $ 1 million are starting to experience the same low inventory issues. .

“Potential buyers may need to expand their geographic search areas, given the current tight market,” Yun said. “If there were more inventory to choose from – ideally a five or six month supply – then more buyers would be able to buy properties affordably.”

A recent hike in mortgage rates does not appear to be having much of an effect on homebuyer demand. The average rate on the popular 30-year fixed loan started the year below 3% and is now at 3.45%, according to Mortgage News Daily. It’s still low, historically speaking.

Home prices, however, are rising rapidly. They are up more than 11% from a year ago, according to the latest S&P CoreLogic Case-Shiller House Price Index. Price increases are greatest in the lower end of the market, where supply is lowest and bidding wars are rampant.

Regionally, pending home sales in the Northeast fell 9.2% month-over-month and 3.9% year-over-year. In the Midwest, sales fell 9.5% for the month and 6.1% from February 2020.

Sales in the South declined 13% per month and increased 2.9% per year. In the West, sales fell 7.4% from January and were up 1.9% from a year ago.