Pending sales on existing homes in the United States fell in December by the largest margin since May 2010 and has been directly tied to higher borrowing costs as rates rise and affordability decreases. Last month, existing home sales sank 8.7 percent after November’s print of .2 percent was revised down to a decline of .3 percent, according to data from the National Association of Realtors (NAR). Analysts were looking for a decline of .1 percent.
The polar vortex that blanketed the United States, particularly the North- and Southeast, coupled with the tight inventory is the expected culprits that foiled December’s print and stopped buyers from looking for homes. Scott Anderson, chief economist at Bank of the West, said “weather has been playing havoc with the housing numbers.” However, the weather has been perfectly fine prior to December, and the housing data has been mixed at best.
Even with the drop, the pending sales index came in at 92.4 (out of 100) and shows healthy activity on a seasonally-adjusted basis. Mortgage rates are still higher from historical lows, but Freddie Mac indicates the average 30-year fixed rate mortgage was 4.32 percent compared to 3.42 percent from a year earlier. In relation, a 30-year fixed in 1995 was well above eight percent. In 2008, the same rate was above six percent.