It’s like the Yogi Berra quote – nobody goes there anymore, it’s too crowded. For the fifth consecutive month, U.S. pending home sales dipped – this time, down 2.8% in January from December, according to a report from the National Association of Realtors. And inventory shortages are the culprit.
Despite the decline, many industry observers see big potential for the housing market in the year ahead.
It’s no secret that low mortgage rates and societal shifts brought on by COVID-19 have collided to form a red-hot housing market. But many would-be buyers have also been thwarted by comically low resale inventory, as well as supply chain constraints and escalating materials costs that have made life difficult for homebuilders. January was illustrative.
“Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” said Lawrence Yun, NAR chief economist. “That said, there has been an increase in permits and requests to build new homes.”
According to the NAR, the South (+0.1%) was the lone region with a gain from the month prior, while the other three major U.S. regions – the Northeast (-7.4%), Midwest (-0.9%), and West (-7.8%) – experienced month-over-month decreases in January. All four areas saw contract transactions increase from a year-over-year standpoint.
