Housing Rebound Dies: Higher Rates Spark New, Existing, & Pending Home Sales Slump

After disappointment in new- and existing-home-sales, pending home sales in April tumbled 1.3% MoM (missing expectations of a 0.4% gain - and well below the lowest analysts estimate).

Contract signings to purchase previously owned U.S. homes unexpectedly declined in April, underscoring the housing market’s challenge centered around a persistent inventory shortage, according to data released Thursday from the National Association of Realtors in Washington.

Signings dropped in three of four regions, led by a 3.2 percent decline in the Midwest; fell 1 percent in the South and 0.4 percent in the West, while sales agreements were unchanged in the Northeast. Pending home sales index for West was lowest since June 2014.

A limited number of for-sale properties is keeping prices elevated at a time when mortgage rates have climbed to an almost seven-year high.

“The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels,” Lawrence Yun, NAR’s chief economist, said in a statement.

At the same time, “demand for buying a home is very robust,” Yun said. “Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher.”

As a reminder, economists consider pending sales a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a deal closes, typically a month or two later

And housing does not look like it's going to get a bounce anytime soon...

 

Comments

bshirley1968 Juggernaut x2 Thu, 05/31/2018 - 11:01 Permalink

No worries. We'll just raise some tariffs or sanction somebody, right?

This party is cracking up. You can see it on energy, housing, bonds, stocks, trade, etc. DB is on the ropes. Debt delinquency is on the rise on all levels of credit. Credit cards are tapped out.....and the whole damn economy has stagnated over the last 6 months. Something is about to make a break for it and get way out of control.

In reply to by Juggernaut x2

steelhead23 Juggernaut x2 Thu, 05/31/2018 - 14:54 Permalink

"No money down."  Let that sink in for a minute.  Who then bears the risk of the market turning?  The buyer?  Hell no, they could simply mail in the keys.  The lenders?  (Laughter) Where have you been?  The banks might suffer a little, but as long as the powers that be hold that the major banks are necessary to an efficient economy, it is your ass that covers their losses.  As long as we separate the risk from the risk takers we should expect perverse outcomes.  FX and precious metals may help you survive, but the economy would sputter and virtually everyone who doesn't have a 9 zero level of wealth will suffer.  Isn't crony capitalism great?

In reply to by Juggernaut x2

Aliens-R-Us Thu, 05/31/2018 - 10:11 Permalink

Can't wait until the market really collapses.  Put a lot of BS real estate, lawyers out of business and then we can swoop in and snag some good deals.

MAGA!

Honest Sam Consuelo Thu, 05/31/2018 - 10:47 Permalink

 

A recapture of rents paid the last three years would be enough for me to buy so the current price on a $400,000 (worth in materials and labor, $150,000) would have to drop to $320,000 and preferably $295,000 to pay me for my patience, my commute, and the tiny space  I get for $20,000 a year in rent.

Bring it!

In reply to by Consuelo

chomu Thu, 05/31/2018 - 10:31 Permalink

Every Joe and Diane out there has become a Realtor. That's your sign right there of a market peak. The most useless and overpaid profession that has ever existed. I just listed a rental property here in Florida myself, tired of being a landlord and fixing shit. Created a Zillow ad for free, had a friend take some professional pics, cleaned up the landscaping really nice. Had multiple offers from individual shoppers in 48 hours. One had an agent who wanted me to pay her 3%, told her ya no thanks. The buyers called me directly and we wrote up a contract at my kitchen table. Had a friend who is an RE attorney do the closing and only charge me a $200 settlement fee. Buyers put 5% down, paid all closing costs and closed in 24 days.

 

All told I have an extra $21,000 in my bank account that otherwise would have gone to a listing agent ...who may have done 10 hours worth of work.

FringeImaginigs chomu Thu, 05/31/2018 - 12:14 Permalink

Good on you!  And you can do the same thing if you ever want a new house too. Act as your own general contractor. Now a bit more work, a bit more experience needed, and a bit more risk than acting as your own sales agent, but the payoff is even higher. You can bank on close to 20% of the asking retail price.

In reply to by chomu

brown_hornet Thu, 05/31/2018 - 12:23 Permalink

Just sold the old family home in the west Chiraq burbs for $2500 over asking in 1 day. Did pay an agent, but we had to split it 4 ways so I didn't want to do all the extra work of selling. Glad we got out when we did.

dondonsurvelo Thu, 05/31/2018 - 12:54 Permalink

Homebuilders will see this as a reason to slow down the new developments which will mean a shortage of homes again in a couple of years.  Home prices will dip short term but a shortage of houses down the road will create demand which will increase home prices. 

notfeelinthebern Thu, 05/31/2018 - 12:57 Permalink

April here in Minnesota was horrendous, with lots of very cold weather and deep snow. Am sure it was the same for surrounding states. Anyone looking for homes in this area probably did so out of absolute necessity. For this area, weather (for once) probably did impact sales.