Home sales see broad nationwide drop

Pending home sales declined in February for the fourth month in a row, as would-be buyers grapple with fewer, pricier homes to choose from and rising interest rates.

A for sale sign is posted in front of a home for sale on March 18, 2022 in San Rafael, California. (Photo by Justin Sullivan/Getty Images) ((Photo by Justin Sullivan/Getty Images) / Getty Images)

Contract signings dropped by 4.1% last month from January and were down 5.4% year over year with all four regions in the U.S. seeing a decline, according to the latest data from the National Association of Realtors.

MORTGAGE REFIS DOWN 50% VERSUS YEAR AGO

“Pending transactions diminished in February mainly due to the low number of homes for sale,” said Lawrence Yun, NAR’s chief economist. “Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale.’”

Inventory for homes was at an all-time low heading into the month, and mortgage loan sizes were near record highs despite interest rates breaching 4%. As of February, the average mortgage payment was 28% higher than the same month last year.

A home under construction and for sale is shown in Roswell, Georgia. (AP Photo/John Bazemore, File) (AP / AP Newsroom)

RATE HIKES, HIGH PRICES LEAVE FIRST-TIME HOMEBUYERS ‘FRUSTRATED’

“If we hold income constant at its February 2021 level, the 95 basis point increase in rates from February 2021 to February 2022 resulted in a decline in house-buying power of about $53,000,” said Odeta Kushi, deputy chief economist at First American. “Some buyers that are being priced out of the housing market are experiencing double-digit house price growth and rising rates.”

Yun anticipates a 7% decline in home sales this year compared to last, and forecasts that rates will hover around 4.5% to 5% for the remainder of 2022.

A sold sign sits in front of a house in Brighton, N.Y. (AP Photo/Ted Shaffrey, File) (Associated Press / AP Newsroom)

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“It is still an extremely competitive market, but fast-changing conditions regarding affordability are ahead,” he said. “Consequently, home sellers cannot simply bump up prices in the upcoming months, but need to assess the changing market conditions to attract buyers.”