Number Of Houses In Contract Is Plummeting By Double Digits: Here's Why

With the seasonal peak of pending home sales behind us, the market is showing some changes that could impact future sales rates and prices. 

What Happened: The total number of homes in the contract pending stage dipped to 389,000, down 3% from last week and 15% from the same time last year, according to Altos Research founder Mike Simonsen.

While mortgage rates currently ebb around 7%, the median price of single-family homes in the U.S. has held steady at $454,900. Simonsen noted the trend of declining inventory coupled with more buyers than sellers is keeping median home prices on the high side.

By July, the U.S. is likely to see negative year-over-year inventory changes, indicating that fewer homes are available on the market than last year.

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“Home buyers are willing to pause when conditions are not in their favor,” Simonsen said, drawing attention to previous instances in July and September of last year when homebuyers hit the brakes, leading to inventory spikes.

The Altos Research founder’s data suggested that while the 7% mortgage rate has slowed sales volume, it hasn’t affected home prices just yet. Though the trend can change if interest rates are kept higher for longer and fewer offers are made.

The median price of the newly sold homes that have gone into contract each week has actually increased by 1%, Simonsen said, now at $384,000. 

Price reductions this year have been minimal compared to 2022 as well. Just 30.7% of the market has seen a price cut, which is a slight increase of 40-basis points from the previous week.

In contrast, price reductions during the same period in 2022 were increasing by up to 180-basis points per week, signaling a more obvious slowdown in home prices.

“We can see that there is demand for homes at these prices and these rates, even if we can see that demand softened a bit recently,” he said.

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