Pending home sales slump

New contract signings fall again with inventory at an all-time low

Pending home sales fell for the third month in a row in January, amid all-time low inventory and sky-high prices.

sold

A sold sign is posted in front of a home sale in San Francisco, California. (Photo by Justin Sullivan/Getty Images) (Photo by Justin Sullivan/Getty Images / Getty Images)

The latest data from the National Association of Realtors shows contract signings for home sales dropped 5.7% last month, when the number of available homes on the market hit a record low of 860,000 units.

"With inventory at an all-time low, buyers are still having a difficult time finding a home," said NAR chief economist Lawrence Yun.

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The Pending Home Sales Index showed a decline in sales across three of the four major regions in the U.S. according to the NAR, with sales in the West actually seeing a boost last month. 

new home sales

A "Sold" sign outside a new home under construction in Tucson, Arizona, U.S., on Tuesday, Feb. 22, 2022. (Photographer: Rebecca Noble/Bloomberg via Getty Images) (Photographer: Rebecca Noble/Bloomberg via Getty Images / Getty Images)

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Pending home sales dropped by 12.1% in the Northeast in January, 6.3% in the South and 5.9% in the Midwest. The West saw contracts increase by 1.5%. Year over year, total sales fell by 9.5%, with all regions posting declines.

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"Given the situation in the market – mortgages, home costs and inventory – it would not be surprising to see a retreat in housing demand," Yun added.

Mortgage interest rates have been on a steady climb, with the average 30-year fixed-rate product hitting 4.06% this week – nearly a full percentage point higher than where it sat a year ago according to the Mortgage Bankers Association.

sold

A "Sold" sign stands outside a home following a snow fall in Geneseo, Illinois, U.S., on Monday, Jan. 20, 2020. (Photographer: Daniel Acker/Bloomberg via Getty Images) (Photographer: Daniel Acker/Bloomberg via Getty Images / Getty Images)

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The MBA's latest numbers indicate a 13.1% drop in mortgage applications from a week ago, while the average loan size has hovered around $453,000.