Pending home sales fall for fifth consecutive month

NAR’s chief economist blames a lack of inventory, not a decline in demand

National /
Feb.February 26, 2021 07:00 AM
Home sales were the busiest January on record, but still the fifth month of decline in a row. (iStock)

Home sales were the busiest January on record, but still the fifth month of decline in a row. (iStock, Unsplash)

Pending home sales fell for the fifth month in a row — but not for lack of demand, experts say.

The number of home contracts slipped 2.8 percent from December, according to the National Association of Realtors’ monthly index. Though it’s the fifth month of consecutive decline, it was the busiest January on record, with volume up 13 percent year over year.

A drop in pending home sales is often thought to indicate a drop in demand from homebuyers, but Lawrence Yun, NAR’s chief economist, attributed the decline to a lack of inventory.

“Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” he said in a statement.

Inventory is at historically low levels. At the end of January, an estimated 307,000 new homes were for sale, or a four-month supply based on the month’s rate of sales. The unsold number of existing homes last month will be sold within 1.9 months, according to NAR’s latest report.

Joel Kan, head of industry forecasting at the Mortgage Bankers Association, agreed with Yun, but he also noted that rising home prices are locking some would-be buyers out of the market.

“Various other data sources have pointed to higher median sales prices and record-high purchase mortgage loan sizes, all of which have started to create affordability challenges in many parts of the country,” he said in a statement.

Additional housing inventory is coming, but homebuilders are facing some headwinds. Building permits to build new homes surged last month, but housing starts declined as construction costs increased.





    Related Articles

    arrow_forward_ios
    220 Central Park South (Getty)
    Second resale at 220 CPS among last week’s Manhattan luxury deals
    Second resale at 220 CPS among last week’s Manhattan luxury deals
    Photo illustration of Fredrik Eklund and Dottie Herman (iStock, Getty)
    Douglas Elliman expands into tight Texas housing market
    Douglas Elliman expands into tight Texas housing market
    15 Central Park West penthouse and Lindsay Rosenwald (Google Maps, BHS, Fortress)
    15 Central Park West penthouse sells for $46.7M
    15 Central Park West penthouse sells for $46.7M
    (iStock)
    Hot, hot, hot: Resi market sets new price records in March
    Hot, hot, hot: Resi market sets new price records in March
    Housing starts soared in March, which is good news for a residential market hampered by low inventory and high demand. (iStock)
    Good news: March housing starts soar 19%
    Good news: March housing starts soar 19%
    Ilan Bracha (Getty)
    From boss to broker: Ilan Bracha joins Corcoran
    From boss to broker: Ilan Bracha joins Corcoran
    Duke Properties’ CEO Albert Dweck. (Duke)
    Duke Properties’ CEO used company funds for lavish lifestyle: lawsuit
    Duke Properties’ CEO used company funds for lavish lifestyle: lawsuit
    (iStock)
    Homebuilder sentiment ticks up in April
    Homebuilder sentiment ticks up in April
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...