Home Sales Conundrum
The Home Sales Conundrum: If Rates Are Falling, Why Aren’t Buyers Moving?
Affordability Is Improving — But Activity Isn’t
Housing affordability is showing signs of improvement. With mortgage rates now nearing 6%, approximately 5.5 million more U.S. households can qualify for a mortgage compared to last year, when rates hovered closer to 7%.
Yet buyer activity remains muted.
According to the National Association of Realtors (NAR), pending home sales — which measure signed contracts and indicate future closings — slipped 0.8% month-over-month in January and declined 0.4% year-over-year.
Despite easing borrowing costs, the anticipated winter surge in buyer demand simply hasn’t materialized.
Is Weather to Blame?
Severe winter storms and prolonged freezing temperatures impacted much of the country. However, even regions facing harsh conditions posted gains:
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The Midwest saw a 5% monthly increase in pending sales.
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The West rose 4.3%.
The slowdown appears broader than just weather-related disruptions.
The Psychology Behind Buyer Hesitation
NAR Chief Economist Lawrence Yun noted that “improving affordability conditions have yet to induce more buying activity.”
History shows that when rates drop, newly qualified buyers do not enter the market immediately. Based on past cycles, roughly 10% of newly qualified households may become active — potentially adding about 550,000 buyers this year.
But hesitation remains driven by:
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Ongoing price growth
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Limited inventory
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Economic uncertainty
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Sellers reluctant to list
Lower rates alone are not enough to trigger urgency.
The Supply Constraint Remains the Core Issue
Housing supply is still tight.
Inventory of existing homes declined 0.8% in January compared to December and rose only 3.4% year-over-year — a slowdown from last year’s stronger inventory gains.
If more buyers re-enter the market without a meaningful increase in supply, the result could be renewed upward pressure on prices.
That is why policy efforts like the Housing for the 21st Century Act aim to address structural shortages. Realtor.com estimates the national housing deficit at nearly 4 million homes.
Prices Continue to Climb — But Growth Is Slowing
Nationally, the median existing-home price reached an all-time high of $396,800 in January.
Additionally:
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73% of 230 metro areas reported year-over-year price increases in late 2025.
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Since January 2020, the typical homeowner has gained approximately $130,500 in housing equity.
While appreciation is moderating in some markets, price resilience remains strong.
Markets Where Buyers Are Moving
Even amid national softness, certain metros posted strong annual gains in pending sales:
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Phoenix-Mesa-Chandler, AZ (+11.8%)
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Boston-Cambridge-Newton, MA-NH (+10.7%)
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Charlotte-Concord-Gastonia, NC-SC (+10.7%)
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San Francisco-Oakland-Fremont, CA (+8.9%)
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Oklahoma City, OK (+8.7%)
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St. Louis, MO-IL (+8%)
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Virginia Beach-Chesapeake-Norfolk, VA-NC (+7.6%)
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San Diego-Chula Vista-Carlsbad, CA (+7.5%)
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San Antonio-New Braunfels, TX (+7.4%)
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Miami-Fort Lauderdale-West Palm Beach, FL (+6.8%)
Notably, the Miami metro area — including Fort Lauderdale and West Palm Beach — continues to outperform many regions nationally.
What This Means for South Florida
In South Florida, we are observing a market that is not frozen — it is selective.
Buyers are:
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Taking longer to make decisions
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Negotiating more carefully
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Monitoring rates closely
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Prioritizing value and location
Sellers are:
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Less inclined to list if they locked in sub-4% mortgages
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Expecting strong pricing due to equity gains
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Competing with new construction incentives
The result is a market in balance — but sensitive to shifts in supply.
What Laura Graves Observed
The current market isn’t stalled — it’s recalibrating.
Rates near 6% expand qualification, but confidence and inventory drive movement.
In South Florida:
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Migration trends remain strong
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Luxury and lifestyle-driven purchases continue
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Equity levels provide stability
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Supply constraints limit sharp corrections
For buyers, this may represent a strategic window before additional qualified households re-enter the market.
For sellers, pricing precision and presentation are critical in a more analytical buyer environment.
Strategic Questions to Ask Right Now
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Will inventory rise meaningfully this spring?
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Will rates stabilize or fluctuate again?
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Could renewed buyer demand push prices higher later this year?
Timing matters — but preparation matters more.
If You Considered Buying or Selling in South Florida?
Call Laura: 786-457-8001
Send Email: [email protected]
