In 2023, the real estate market faced significant challenges, marking the lowest volume of existing-home sales since 1995. According to the National Association of REALTORS®' (NAR) 2024 Member Profile, 26% of REALTORS® identified inventory shortages and housing affordability as the main barriers preventing clients from purchasing homes.

Market Conditions and REALTOR® Challenges The past year proved difficult for REALTORS® due to high mortgage rates and low housing inventory, significantly impacting sales volume. Jessica Lautz, NAR deputy chief economist and vice president of research, highlighted the intense competition REALTORS® faced to secure client representation and accepted offers in a tough market.

There is good news to be celebrated in the new home sector. All measures, from new home sales to housing starts to building permits and housing completions, are up year-over-year. Given the dearth of housing inventory in the Existing-Home Sales sector, this is cause for celebration. Many current homeowners are unlikely to ditch their golden handcuffs of low-interest rate mortgages and may have some separation anxiety with moving. New home inventory helps to alleviate this problem. Additionally, another segment is growing within the housing starts sector: built-for-rent (BFR).

In May, pending home sales experienced a slight decline of 2.1%, as reported by the National Association of REALTORS® (NAR). This decrease was primarily driven by monthly losses in the Midwest and South, while the Northeast and West saw gains. However, when looking at year-over-year data, all U.S. regions recorded reductions in pending home sales.

Key Highlights:

• Pending Home Sales Index (PHSI):
  • The PHSI, a forward-looking indicator based on contract signings, decreased to 70.8 in May.
  • This represents a 6.6% drop in pending transactions compared to the same month last year.
  • For context, an index of 100 corresponds to the level of contract activity in 2001.

NAR Chief Economist Lawrence Yun noted, “The market is at an interesting point with rising inventory and lower demand. Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”