The pending house sales market health is uncertain.
According to the National Association of Realtors, the housing market showed increases and decreases in two sectors. Home sales in the U.S. jumped in the first two months of 2022, showing an increase of 6.7%. The home selling market hit a new high record in the past 20 months with a seasonally adjusted unit of 6.5 million units. Even with the good news, the number of sales decreased by 2.3% compared to the same month a year ago. On top of that, the association market reviled a decrease for the third month in a row in terms of pending home sales.
According to national association reports, pending home sales fell for the third month in a row, setting a new low. The index is based on signed contracts for previously owned homes, which fell by 5.7% in January. a clear sign that the housing market isn’t in its best condition. Inflationary pressures and the COVID spread hampered the housing market. It was the south, the northeast, and the mid-east-west who saw the largest dropped. Yet, on the other hand, the pending home sales have increased in the west.
Based on economists’ reports, January pending home sales declined by 9.5%. That’s the third month of decline. Which leaves us with the most important question: what does that mean for the housing market?
According to economists, this retreat in home buying was expected due to the increase in mortgage rates and a decline in inventory to its all-time low. Homebuyers still find it difficult to buy homes in the light of recent events. In the next 2-to 4 weeks, the Federal Reserve will begin its first hike, but only if the market conditions allow for a hike.
The total housing inventory market in January also declined by 2.3% compared to December sales, which by the way, also saw a drop compared to November sales. These results were taken from the Nar reports, which have tracked inventory homes. Furthermore, this is the third month of decline and the lowest rate in inventory history. A summary of the housing market in the first months of 2022 shows that the unsold homes are at their lowest number of all time. Plus, there is a lot of big and large competition in the real estate industry that puts a certain pressure on buyers and makes it difficult for sellers.
Inflation is at its highest level since 1982. That makes its hurdles in the market’s recovery process or at least slows down its recovery pace. Inventory is now shifting its focus and fears to the recent Ukrainian crisis, which may have an impact on Federal interest rate hikes, and the market is already suffering from the recent Russian attack.
That’s one factor among many that led to the lower inventory rate, like interest rate hikes and the sharp increase in home prices. Goldman forecasts that there will be seven hikes this year, with each hike being an average of 25 basis points. That will make it harder for the housing market because it will probably lead to an increase in mortgage rates.