Pending Home Sales Tumble To Lowest In A Year (And It's About To Get Worse)

Tyler Durden's picture

Against expectations of a 0.6% rise, pending home sales in January plunged 2.8% MoM - the biggest drop since May.

The West - the most expensive region - saw the biggest decline, down 10.3% MoM with The Midwest also tumbling 5.2% MoM.

As mortgage rates have soared since the election (and mortgage applications tumbled), affordability has become a major issue according to NAR with pending home sales at the lowest in a year.

 

And it's going to get a lot worse...

Lawrence Yun, NAR chief economist, says home shoppers in January faced numerous obstacles in their quest to buy a home.

"The significant shortage of listings last month along with deteriorating affordability as the result of higher home prices and mortgage rates kept many would-be buyers at bay," he said.

 

"Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago. Most notably in the West, it's not uncommon to see a home come off the market within a month."

According to Yun, interest in buying a home is the highest it has been since the Great Recession. Households are feeling more confident about their financial situation, job growth is strong in most of the country and the stock market has seen record gains in recent months. While these factors bode favorably for increased sales in coming months, buyers are dealing with challenging supply shortages that continue to run up prices in many areas.

"January's accelerated price appreciation is concerning because it's over double the pace of income growth and mortgage rates are up considerably from six months ago," said Yun. "Especially in the most expensive markets, prospective buyers will feel this squeeze to their budget and will likely have to come up with additional savings or compromise on home size or location."

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clade7's picture

Including tents and RV's?

vq1's picture

oh, I like RVs. I can get a bigass 2016 32' for like 12k. 

 

But look at yurts, those things are expensive!

Stroke's picture

Trees DO grow all the way to the sky

Houses Depreciate's picture

That was last year. In the meantime, enjoy the falling prices. ;)

divingengineer's picture

For someone looking, it couldn't be better news.

Joe Sichs Pach's picture

But I thought there's never been a better time to buy a house?

A. Boaty's picture

My realtor sez now looks like a good time to buy.

rockstone's picture

"So good, you should buy two or three. I know a great loan guy who can help."

Every Realtor in Las Vegas, 2002-2005

Bam_Man's picture

Bullish, obviously.

A. Boaty's picture

Has foreign direct investment in USSA real-estate tapped out? What about institutional investment? Do banks still keep foreclosed houses off the market as part of shadow inventory?

Pigeon's picture

There is a house in my neighborhood that has been sitting vacant since I first moved to Vegas Jan 2013. Probably 50% are rentals. Though that % could be higher.

ZD1's picture

It could also be a pot grow house or meth house.

GlassHouse101's picture

Happy landlord here, time to raise the rents (again)

GooseShtepping Moron's picture

Fuck you. I hope you choke to death on your own vomit.

GlassHouse101's picture

You scare me Mr. Internet Tough Guy . . BTW - if you weren't so angry, go to the bank, get a loan, and get your own rental property! 

Houses Depreciate's picture

Last week you said you're underwater. How long before default?

GlassHouse101's picture

you must be confusing me with someone else, I have + equity with all.

Houses Depreciate's picture

My how things change in just a week. ;)

chosen's picture

Landlords are the scum of the earth, screwing mainly poor people to fatten their wallets.  When the SHTF, you will be among the first to go down.

GlassHouse101's picture

You are well indoctrinated, it's not your fault. Not all landlords are big corporate fat cats. I have 3 rental units that all have their own expenses (mortgage, fees, taxes, etc.) and my gains are minimal (right now) . . When inflation hits, I expect that I can make a real actual income from them after my job is (likely) lost. 

chosen's picture

In college,  a bunch of us lived in rooms in a large house.  The owner of the house was jew boy who also lived in one of the rooms.  We found out his mortgage and how much he was screwing us.   We got together and had a rent strike.  You should have seen his face when I told him we were going on a rent strike until he lowered his rates.   He did.

GlassHouse101's picture

Lol wow. . 100$ you are a millenial. The entitlement is strong with you!

chosen's picture

Wrong, just don't like being fucked over, especially by a jew boy.

chubbar's picture

So, you'll lose your job but your renters will keep theirs? When inflation hits you plan to make more money off your renters? I'm not sure you've thought this through.

truthseeker69's picture

FEAR THE EVIL LANDLORD - The ZH brute.

Not a single mention of the FED or the Government's inflationary policy? Ok, you're credible. 

 

 

edifice's picture

I love my landlord. She provides a product (housing) at a low price and has not raised rents in 3 years. I have no responsibilities, except mow the yard once a month. Many landlords aren't that bad.

canisdirus's picture

I, too, have had great luck with landlords. 2 of the last 3 never raised the rent and always did well by me. The only one I bolted from raised the rent the moment the lease was up and it was already way over market rate anyhow (because I was over a barrel).

I love landlords that just cover their costs with a reasonable profit, then roll for the long haul. I'm happy to fix little things myself with those situations.

The hard part is finding these people with good properties that are going to be good to you.

Money_for_Nothing's picture

I alternate between despising landlords and feeling sorry for them. Only way to make big money is to be a slum lord. All it takes is one politically well connected deadbeat to bankrupt a landlord. Landlords effectively are renting property from the local government. A local government which can bankrupt them at any moment.

PlayMoney's picture

I'm a landlord too. never been called scum, although i have been called a dumbass a time or 2. Sold everything but 1 house that is paid for. Last tenant in Fall 2014 and still paying same rent because she pays on time every month.

American Snipper's picture

I hate lowering myself to name calling, though you are an idiot. Many people can't afford or qualify for a home loan, so rentals are truly needed. 

Houses Depreciate's picture

Don't know about that one..... Rental rates are falling at a pretty good clip.

Houses Depreciate's picture

NY, San Fran, LA, Miami...... and sticksville.

chosen's picture

When the illegals start getting deported, rents will fall dramatically in the shit cities you mentioned.  Wages will go up.  Landlords will be double fucked because they will be getting lower rents, while at the same time having to hire white people at market wages to do their maintenance, while trying like hell to rent their empty units.  Eat shit, landlords.

onwisconsinbadger's picture

Drumpf in charge. Sad !!!!!

American Snipper's picture

Get over it jerkey, 8 years of obongo almost destroyed us. And you would have been happy with crooked hitlery?????

KimAsa's picture

Meanwhile, money-laundering in key US cities tumble to lowest in a year. . .

directaction's picture

Quick Scientific Poll:
<--- This housing bubble has popped. It's a terrible time to buy a house.
<--- I am stupid, a finacial mess, can't do math, and live paycheck to paycheck. 

canisdirus's picture

Hasn't popped yet, but when it does, there is going to be red ink in the streets. It looks like when the music stopped last time - incomes are still flat, housing has just beat the old limits, and we still have a lot of long-vacant shadow inventory.

All they need to do to crash it is pop that fed funds rate to ~5% and the flood of available houses at half the current prices will be insane (and there will still be almost nobody that can afford to buy).

Houses Depreciate's picture

It already popped and prices are heading down right now.

canisdirus's picture

Where? I haven't seen it in any place with jobs that I've looked lately. Stagnant with ultra low inventory is all I see in most markets with good job prospects.

Some areas are in decline, but those area have no jobs, so it's predictable.

Houses Depreciate's picture

NYC, San Francisco, Miami, etc

Rolln's picture

Over Priced even before the rates went up. Growth in the US will never happen if everyones paycheck goes nearly all to housing.

how_this_stuff_works's picture

Housing? I thought everyone's paychecks were going for healthcare premiums.

6 of one, half-dozen of the other. Broke is broke.

az_patriot's picture

Depends on where you want to live.  Houses that look like slums are selling for hundreds of thousands of dollars in places like San Diego -- seriously, who in their right mind would pay $800,000 for a pathetic broken-down shack of a house just because it's a stone's throw from downtown SD?  Same problem in some other areas, California being a good example.  Other areas of the country are booming, some are going bust.  The national-level statistics are worthless except it might make great headlines and clickbait.

ZD1's picture

Most of Commiefornia's housing price boom is within 20 miles of the coast. Go inland to the Inland Empire or the Central Valley and prices are more like the rest of the country.

canisdirus's picture

Truth. The average across the country is meaningless when the areas with job growth are completely disconnected from these patterns.

canisdirus's picture

Between high housing prices and 50% jumps in our insurance premiums every year, there's not much left for anything else.

Consuelo's picture

 

 

 

 Great Gawd Almighty I cannot wait (well, perhaps a little while longer), when pink-slip Friday's become the norm here in the Bay Area - from that hyper-productive industry which belts out finished products for export by the petabyte load:

Social Media

And the attendant hyperbolic crash of hyperbolic X10 residential & commericial real estate...

Better yet, not because I necessarily want to pick over the droppings, but because I want to see assholes & elbows, instead of metrosexuals & Starbucks...