High interest rates continue to keep the US housing market on life support.
May numbers from the National Association of Realtors show its index of pending home sales — a forward looking indicator of housing sales based on contract signings — continue to plumb some of the lowest levels on record.
This news comes on the heels of a 11% monthly plunge in new home sales for May, as well as unexpected drops in housing starts and building permits.
It’s no wonder. With 30-year mortgage rates hanging just below 7% and median home prices at an all-time high of $419,300, purchasing is unaffordable for a large swath of the American public. So far, the almost 100 basis point decline in mortgage rates since last October has done little to rejuvenate the real estate sector, as borrowing costs are still elevated relative to the past two decades.
For the current state of affairs to change, somebody has to blink. Either rates need to come down — which is largely up to the Federal Reserve — or would-be sellers are going to have to get real on prices. But there’s no telling when, or if, that’ll happen.
