August Pending Home Sales Hit Lowest Level Since April 2020

There are many national headlines about the real estate market that may make you feel uneasy and like a major issue is brewing. It’s important to look at not only the national housing market but specifically the hyper-local South Florida market to really get an understanding of what’s happening.

National Housing Market Stats

Nationally in August 2023, the number of pending home sales dropped 7.1% compared to July and plummeted 18.7% compared to August 2022. These figures represent homes that have entered into a contract but have not yet closed, serving as a leading indicator for existing-home sales in the coming 1 to 2 months.

South Florida Housing Market Stats

But while those numbers do sound bad, lets look at the local South Florida housing market. In Broward & Palm Beach County for Single Family homes, sales in August 2023 were only down 3.73% compared to July 2023, and only down .6% compared to this time last year.

These stats reinforce what we’ve been saying for some time – hyperlocal market dynamics in South Florida make our market different from many others and more resilient to macroeconomic forces. About 1000 people per day are still moving to Florida, and South Florida is the destination for the majority of these people.

This is in addition to the people that already live here that have normal life events that would cause someone to need to buy a house like the 4 D’s – Death, Divorce, Diamonds (marriage) and Diapers (children). We are still seeing 2-4 offers on most listings if they are priced correctly.

Regional Housing Market Stats

Year-over-year, the West experienced the steepest decline at 21.4%, followed closely by the Midwest at 19.1%. The Northeast and the South also saw declines, falling by 18.2% and 17.6%, respectively.

On a month-to-month basis, the South led the decline with a 9.1% drop in contract signings, followed by the West at 7.7%, the Midwest at 7.0%, and the Northeast at 0.9%.

The U.S. pending home sales index for August stood at 71.8, down from a revised figure of 77.3 in July. This marks the seventeenth consecutive month where the index has remained below the 100-level mark, a benchmark set in 2001 that correlates with existing-home sales above 5 million units. Nationally we are on pace for just over 4 million homes to be sold across the US in 2023, significantly lower than 6.3 Million in 2021 before interest rates started to climb.

What does this mean for you?

The housing market tends to cool every single fall in a cycle - this is completely normal. For buyers on the fence, this may be the best time to take advantage of a lull in the market before the Spring selling season kicks off again next year. This will push up competition and thus prices will go even higher. We have yet to see any data that suggests either prices or interest rates are going to come down in the near future. 

Recently, the Federal reserve has revised its interest rate estimates and is showing a "higher for longer" trend. Barring any major economic change, the Fed is expected to keep interest rates elevated through the end of 2024 rather than start lowering them at the end of 2023 like they originally were expected to do because the economy has proven to be much stronger and more resilient than originally expected. While this is good news for the economy, it does make the housing situation complicated and expensive for the foreseeable future.