The housing market is witnessing a critical period as mortgage rates heavily influence home sales and demand. A 6.1% rise in March, the highest since December 2023, indicates sensitivity to shifting rates. Despite a rise in inventory—up 32.5% compared to last year—home sales have not surged, highlighting the impact of elevated mortgage rates. Regions like the South and West reported significant declines in pending home sales. Although new home sales increased by 10.9%, uncertainties persist, with economic pressures constraining overall market performance.
An index reading of 100 is equal to contract levels in 2001. The month-over-month rise of 6.1% in March, however, was the highest monthly increase since December 2023.
Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market.
The decline in pending home sales comes even as inventory is up substantially relative to last year... existing-home sales for April shows a similar trajectory, albeit not as dramatic.
Elevated mortgage rates and economic uncertainty are headwinds for the housing market; however, rising inventory serves as a tailwind.
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