The US housing market is facing a crisis as pending home sales have reached an all-time low, according to data released by the National Association of Realtors (NAR). In January, month-on-month sales dropped 4.6% to a score of 70.6, with pending transactions also dropping 5.2%. This decline is attributed to historically high prices and elevated mortgage rates, which have made it difficult for buyers to afford homes.
The median sale price of the typical US home reached $418,284 in January, up 4% from last year. Mortgage rates ranged from 6.91% to 7.04%, making monthly payments on a $300,000 home cost an extra $50 compared to last year.
Regional variations showed that sales were particularly affected in the South and Midwest, with declines of 9.2% and 4.5%, respectively. However, some areas like the Northeast experienced a slight increase in pending sales, indicating a potential shift in favor of buyers.
Industry experts point to limited supply as a major contributor to high prices in the Northeast, while higher mortgage rates have eroded buying power nationwide. NAR Chief Economist Lawrence Yun stated that elevated home prices and higher mortgage rates strained affordability, but expects greater sales activity in upcoming months if mortgage rates decrease slightly.
The housing market’s trajectory will depend on inventory levels and mortgage rates throughout 2025 and 2026, with experts predicting continued high rates. However, a slight reduction in mortgage rates could ignite buyer interest, given rising incomes, increased jobs, and more inventory choices.
Source: https://www.newsweek.com/us-housing-market-data-suggests-breaking-point-home-sales-fall-mortgage-rates-high-2037708