Troubling Economic News

Rolled U.S. dollar bills in various denominations.

(GoRealNewsNow.com) – In troubling economic news, packed with rising mortgage rates and economic uncertainties, the U.S. housing market has hit a new low.

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The National Association of Realtors revealed a 4.6% decline in January pending home sales, placing it at the lowest level since data collection began in 2001.

With affordability now out of reach for many, one can’t help but question the future of homeownership in America.

The National Association of Realtors’ Pending Home Sales Index plunged by 4.6% to an all-time low of 70.6 in January.

This drop marks a significant downturn from December and signals a troubling trend for American homeowners and prospective buyers alike.

January’s contract activity declined by 5.2% from the previous year, shaking confidence that the market will make a swift recovery.

To make matters worse, the South reported the steepest decline, with activity falling 9.2% compared to the previous month.

All regions, except the Northeast, saw a decrease, with the latter posting a marginal 0.3% increase from December.

It’s worth noting that the average rate on a 30-year fixed mortgage stayed above 7% throughout January, discouraging many potential homeowners from committing to purchases.

Elevated home prices have coupled with higher mortgage rates to corrode affordability.

As inventory increased 17% over the previous year, high-demand areas still fight shortages.

The housing market has been in a slump since 2022, fueled by rising mortgage rates, causing builders’ shares to steeply decline.

“Lawrence Yun, NAR’s chief economist, noted that while the coldest January in 25 years may have contributed to fewer buyers, the ongoing issues with home prices and mortgage rates are more pressing concerns,” reports AOL.

Mortgage rates, linked to the fluctuating yield on the 10-year Treasury note, have borrowers uneasy.

Concerns about inflation—driven by tariffs and economic policies—limit any potential decrease in rates, compounding anxieties about the housing market’s durability.

Although economists predicted a smaller 1.3% decline for January, the grim reality causes many to rethink their trust in these forecasts.

High tariffs and fears of mass deportations under the Trump administration add extra costs to builders, challenging an already strained sector.

In light of these challenges, homeownership seems more of a pipedream than a reality for many Americans.

While the Federal Reserve has cut its benchmark interest rate by 100 basis points since September, mortgage rates remain high, limiting any meaningful market recovery.