Pending Home Sales, which measure signed contracts on existing homes, fell 1.2% in March, though this was stronger than the 1.8% decline expected. Sales are now down 8.2% year over year. There is no doubt that higher interest rates could be impacting demand, but this report far from signals a “washout” spring homebuying season, as some in the media have said.
In fact, a longer timeframe view shows that the current level of signed contracts is still strong. The annual comparison is skewed because of the huge demand that followed the dip in signed contracts after the start of COVID.
What’s the bottom line?
Although higher rates and low inventory around the country have made buying a home challenging for many people, renting is not necessarily a better option. CoreLogic’s Single-Family Rent Index showed that rents were up 13.1% year over year in February, which is the highest increase on record. This report includes both new rents and renewals, which are increasing between 6-8%. Apartment List’s National Rent Report, which measures new rents, also showed that rents increased by 0.9% in April and 16.3% year over year.