(TheIndependentStar.com) – In an alarming development, the housing market is in turmoil, with pending home sales plummeting to a historic low in January.
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High mortgage rates and economic uncertainty are scaring off potential buyers, signaling a deepening crisis in real estate.
The National Association of Realtors (NAR) reported that their Pending Home Sales Index took a significant hit, falling 4.6% in January to reach a new low of 70.6.
This decline marks the weakest reading recorded since tracking began in 2001 and is a direct reflection of the challenges facing homebuyers today.
Contract activity compared to a year earlier also dropped by 5.2%, showing a continued trend of decreasing buyer engagement.
Despite the Northeast experiencing a slight 0.3% uptick in pending sales from December, other regions were not as fortunate.
The South suffered the most, with activity plummeting by 9.2%.
The overarching issue? Mortgage rates that hover between 6.9% and 7%, effectively putting homeownership out of reach for many Americans, CNBC reports.
Higher interest rates aren’t the only contributing factor, though.
Elevated home prices coupled with these rates have created a barrier to affordability, leaving potential buyers with two choices: stretch their budgets dangerously thin or postpone their plans entirely.
Mortgage rates in January remained above 7% for a 30-year fixed mortgage, further restricting access to home ownership.
This issue isn’t isolated either—inventory increased by 17% year-over-year in some areas, but remained limited in high-demand regions, worsening the buying predicament.
The imbalance between supply and demand contributes to both stalled sales and persistent high prices, reports Fox Business.
January pending home sales drop to the lowest level on record https://t.co/nzGN2e5Lv1
— Antonio Johnson Show (@AJohnsonShow) February 27, 2025
Publicly traded home builders are also feeling the pressure.
Shares have fallen, with Toll Brothers experiencing an 11% decline, while D.R. Horton and Lennar each seeing drops from 7-9%, and Beazer Homes facing a near 17% fall.
Clearly, market confidence is waning under the weight of rising mortgage rates, high home prices, and uncertain economic policies.
The Federal Reserve’s decisions have added complexity, having cut benchmark interest rates by 100 basis points since September before pausing in January.
However, the yields on 10-year Treasury notes have dropped, guiding mortgage rates somewhat downwards. But ongoing concerns about inflation hold potential cuts in check.
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