The Impact of Pending Home Sales Decline in the Southern U.S. during Summer 2024

Posted by Jason White on

Pending home sales dropped 5.5% nationwide, contrary to the expectations of a modest 0.4% increase. In this post, we explore the specifics of the South’s housing market performance and its implications for buyers and sellers in the region.

The decline in the South outpaced the nation at 6.5%. The Pending Home Sales Index (PHSI) for the South fell to 83.5, signaling a significant slowdown in market activity. 

Pending home sales in the South declined by 11.5% compared to July 2023, a more significant drop than the national average of 8.5%. This stark contrast highlights the region-specific challenges faced by the Southern housing market.

 

“A sales recovery did not occur in midsummer,” said NAR Chief Economist Lawrence Yun. “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election”.

 

Several factors contributed to the sharp decline in pending home sales in the South

  • Affordability – the rising home prices is making it difficult for potential buyers to enter the market.

  • Economic Conditions – The U.S. job growth hasn’t been sufficient enough to counteract other negative factors affecting home sales.

  • Interest Rates – Interest rates remain higher than in recent years, impacting buyer purchasing power.

  • Housing Supply – The Real Estate market in Sevier County, Tennessee is experiencing high inventory levels, despite the low inventory issues faced in other regions.

  • Political Uncertainty – The upcoming U.S. presidential election has introduced a “wait-and-see” attitude among some potential buyers, as noted by NAR Chief Economist Lawrence Yun.

 

Implications for Southern Home Buyers and Sellers

For potential buyers in the Southern U.S., the current market conditions present both challenges and opportunities:

 

Opportunities 

  • With high inventory levels, buyers have more options, potentially giving them more negotiating power.
  • Falling mortgage rates could make home purchases more affordable, despite ongoing affordability challenges.

Challenges

  • With high inventory and declining sales in Sevier County, Tennessee, sellers may need to adjust their price expectations to attract buyers.
  • Patience may be key, as the market works through its current challenges.

 

Looking ahead, the falling mortgage rates, high inventory levels, and broader economic factors will likely shape the market’s performance. 

While the current situation presents obstacles, it also offers opportunities for both buyers and sellers who are well-informed and prepared to navigate these complex conditions.