In January’s issue of InvesTech Research, we highlighted the widening cracks in the foundation of the housing market heading into 2025 – it looks like those cracks might be getting wider.
This morning’s release showed pending home sales tumbled in December, missing expectations and falling 5.5%. Pending sales have bounced around a small range over the last couple of years and remain near record lows. This marks a significant downturn in contract signings, which is evidence of prolonged buyer hesitation due to decades-high mortgage rates.
The 30-year fixed mortgage rate remains near 7%, continuing to contribute to affordability issues and keeping potential buyers from purchasing. Despite a full percentage point of rate cuts from the Federal Reserve since September, mortgage rates have actually risen over this same time period. Today’s report further exposes the widening fissures we have been concerned about in the housing market, showing that it remains fragile and will be a key area of the market and economy to monitor going forward.
