“Home Sales Hit a New Low: Even Lower Than Financial Crisis!

Recent pending home sales numbers show that the U.S. housing market is in dire straits. The National Association of Realtors (NAR) reported that existing home sales decreased significantly in April of 2021 from March. This decrease is the biggest month-over-month plunge on record, exceeding even the depths of the financial crisis in 2007-2009. The decrease in pending home sales is being attributed to the severe shortage of available homes in many markets. With the buyer demand still strong, the market just can’t keep up, leading to increased prices and limited housing options. The NAR also noted that mortgage rates remain low, making buying homes more affordable than renting, yet buyers can’t find the housing they need to be able to close the deal. The decrease in pending home sales is hitting the entry-level market particularly hard. With so much demand and not enough supply, first-time buyers are having a difficult time finding homes they can afford. The situation is even more challenging for buyers in the middle-income brackets since they’re competing with cash buyers who are often investors paying all cash and looking to generate a return on their investment. The pending home sales numbers serve as a further reminder of how fragile the current housing market is. With no relief from the low inventory in sight, it’s likely we’ll continue to see record lows in pending home sales. It’s not clear how long this trend will last, but it’s certain that the housing market won’t recover until the supply of homes meets the demand.