Real Estate Updates

The Housing Market Is in Recovery Mode

housing market

Pending Home Sales Fall in the U.S. Don’t Worry! 

According to the National Association of Realtors (NAR), pending home sales in the U.S. experienced a decline in May. However, this dip should not overshadow the fact that the housing market is still on a path to recovery. 

Although mortgage rates are hovering around 7%, demand for homes remains robust. Unfortunately, potential buyers are facing a scarcity of available properties as homeowners are hesitant to sell. This shortage of housing inventory has had a notable impact on pending home sales during the peak season for home buying

In May, home sales dropped by 2.7% compared to the previous month, which fell below expectations. Despite this decline, economists believe that pending home sales serve as an indicator of the direction of existing-home sales in the coming months.

While there is an evident imbalance between supply and demand, with pent-up demand from buyers and reluctant sellers, the housing market is not in crisis but rather in recovery mode.

The persistence of this unique situation will depend on mortgage rate fluctuations and the willingness of existing homeowners to sell. However, builders are taking advantage of the opportunity, as sales of new homes surged by 12% in May. 

NAR Chief Economist Lawrence Yun emphasizes that the housing market remains resilient, with approximately three offers for every listing. Nonetheless, the limited housing inventory continues to hinder the fulfillment of housing demand.

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