Pending home sales fell for the fifth consecutive month, according to the National Association of Realtors pending home sales index.
According to the index, pending home sales for March were down 1.2% from February, and compared to last year, pending sales fell for the tenth consecutive month, by 8.2%, with sales down across all regions.
In the index released Wednesday, pending sales rose only in the Northeast region.
“The falling contract signings are implying that multiple offers will soon dissipate and be replaced by much calmer and more normalized market conditions,” Lawrence Yun, NAR’s chief economist, said. “As it stands, the sudden large gains in mortgage sales have reduced the pool of eligible homebuyers and that has consequently lowered buying activity.”
The aspiration to buy a house, Yun said, remains but the financial capacity has become a major limiting factor. He expects the 30-year fixed mortgage rate to climb to 5.3% by the fourth quarter, followed by an average rate of 4.9% in 2022 and a jump to 5.4% in 2023.
Yun is also forecasting inflation to average 8.2% this year, adding that he expects it to moderate to 5.5% in the second half of 2022.
He also noted that, because of higher mortgage rates and sustained price appreciation, there has been a 31% increase in mortgage payments year-over-year.
"Overall existing-home sales this year look to be down 9% from the heated pace of last year," Yun said. “Home prices are in no danger of decline nationwide. basis, but the price gains will steadily decelerate such that the median home price in 2022 will likely be up 8% from last year.
Yun also predicted that, due to 20% increases in the cost of rental properties, more renters will explore homeownership. That, he said, will lead to a boom in multi-family home construction starts reaching a 20% increase.
Existing home sales for April will be reported May 19 and released May 26.
