US pending home sales plummet as high mortgage rates take a toll

foxbusiness.com:

AmeriVet Securities head of U.S. rates Gregory Faranello on the Fed pausing rate hikes, his outlook for the market and the UAW strike.  

Pending home sales plunged in the U.S. last month as high mortgage rates deterred more would-be buyers and sellers from making deals.

The National Association of Realtors' Pending Home Sales Index tumbled 7.1% to 71.8 in August, a much greater decline than the 0.8% drop analysts polled by Refinitiv expected.

Year over year, pending transactions are down 18.7%, the NAR's data shows.

A sign outside a home for sale in Atlanta, Georgia, on Sept. 6, 2023. (Elijah Nouvelage/Bloomberg via / Getty Images)

"Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers," said Lawrence Yun, NAR's chief economist. «Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets.»

MORTGAGE DEMAND SLUMPS AS RATES SURGE TO 23-YEAR HIGH

Meanwhile, would-be sellers locked in with much lower rates are staying put, contributing further to the ongoing inventory shortage that has been driving up home prices ever since the pandemic began.

The sale of new homes dropped unexpectedly in August, too, falling 8.7% to a seasonally adjusted annual rate of 675,000 units, according to the latest data from the Commerce Department.

Homes under construction in Sacramento, California, on July 3, 2023. (David Paul Morris/Bloomberg via / Getty Images)

The decline in sales indicates that a resurgence in mortgage rates is pushing many would-be buyers out of the market. That slowdown in demand contributed to a decline in new home prices last month.

The median price for a new home fell to $430,000 from