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The number of pending home sales slid 3.8 percent in December compared to November and fell 6.9 percent from December 2020, according to the National Association of Realtors (NAR).
The number dropped most in the west and northeast, both of which were off by at least 10 percent, although all regions of the country saw fewer contracts.
“Pending home sales faded toward the end of 2021 as a diminished housing supply offered consumers very few options,” NAR chief economist Lawrence Yun said in a statement announcing December’s result.
“Mortgage rates have climbed steadily in the last several weeks, which, unfortunately, will push aside marginal buyers,” he noted.
TREND FORECAST: As we have said before in articles such as “Home Prices Up, Incomes Down” (16 Nov 2021), inflation paired with rising interest rates will continue to block more middle-income households, and most young families, from being able to build wealth by buying their own homes.
Home prices will remain high as shortages of materials and labor constrain new construction. Thanks to inflation, even fewer people now will be able to save enough for a down payment on a house.
Despite the fabled “American Dream” rooted in home ownership, as we have greatly detailed, the U.S. will become a nation with more renters than homeowners.