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New American Focus:
Mortgage & Real Estate

New American Focus: Mortgage & Real Estate

Translating the complexity of the markets into a concise and easy to digest format. Watch videos, read blogs, and view key data on short and medium term trends impacting interest rates, so you can make the right decision for your situation.

Home Sales Slowdown Likely to Stretch into Spring

Model houses | Home Sales Slowdown Likely to Stretch into Spring

Spring is usually the time of the year when the housing market is the hottest, but that may not be the case this year. Instead of home sales heating up, it’s beginning to look like sales will be cooling off as the weather begins to warm up.

New data from the Nation Association of Realtors shows that pending home sales, an indicator of future home sales based on signed real estate contracts, fell in February for the second straight month.

According to the NAR data, pending home sales fell 10.6% in February, which marks the second straight month of declines and indicates that home sales are likely to continue slowing down over the next few months.

As for the cause of the slowdown, it shouldn’t come as a surprise: a lack of available inventory.

“The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift but contracts are not clicking due to record-low inventory,” NAR Chief Economist Lawrence Yun said.

“Only the upper-end market is experiencing more activity because of reasonable supply,” Yun continued. “Demand, interestingly, does not yet appear to be impacted by recent modest rises in mortgage rates.”

According to NAR, homes priced at more than $250,000 are responsible for most of the home sales over the last few months, but Yun noted that even homes priced between $500,000 and $1 million aren’t exactly flooding the market either.

“Potential buyers may have to enlarge their geographic search areas, given the current tight market,” Yun said. “If there were a larger pool of inventory to select from – ideally a five- or a six-month supply – then more buyers would be able to purchase properties at an affordable price.”

The bottom line? Home sales nationwide are slowing down because there simply aren’t enough homes to buy.

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