Housing Market Paradox: Pending Sales Up 10% While Closings Fall 14%

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News Flash

Commitment Issues: Rising Pending Sales But Fewer Closings

Something bizarre is happening in the housing market. Pending sales jumped 10% year-over-year in May, yet closed sales plummeted by 14% during the same period.

That widening gap? It reveals a growing number of real estate contracts hitting roadblocks before closing day. Financial headwinds are likely the culprit.

We saw similar indicators in April with a remarkable 6.2% of active listings pulled from the market entirely—the highest withdrawal rate since 2011. Sellers aren't just struggling to close deals; many are giving up altogether.

Industry experts describe the 2025 housing market as feeling "stuck." Builders are dangling incentives to attract buyers in what's become an increasingly tepid market.

Meanwhile, mortgage rates continue their unpredictable dance, and broader economic factors remain under intense scrutiny.

The Invisible Industry Preventing $900B in Real Estate Disasters

Title insurance rarely makes headlines, but a new analysis reveals just how crucial it is to keeping the real estate market from imploding.

First American's chief economist found that title professionals prevent between $600 billion and $900 billion in potential risk exposure annually. That's nearly a trillion dollars in problems that never happen because someone was doing their job right.

What exactly are title professionals preventing? Everything from errors in public records and undisclosed liens to illegal deeds and forgeries. By catching these issues before closing, the industry stops financial nightmares before they start.

While buyers might see title insurance as just another closing cost, the study emphasizes it's actually the visible tip of a massive risk-management iceberg. Unlike homeowner's or casualty insurance that covers future damage, title insurance protects against past problems that could undermine ownership rights.

Next time you see that title insurance line item, remember: without it we would see lenders requiring massive down payments, skyrocketing interest rates, and dramatically reduced property liquidity.

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More You Should Know

• Rates Fall: July Cut Possible: Mortgage rates dipped to 6.69% for 30-year fixed loans after Federal Reserve Chair Jerome Powell suggested a July rate cut remains a possibility, offering cautious optimism to homebuyers. [Source]

• But Morgan Stanley Doesn’t Think Cuts Will Happen: Morgan Stanley's Chief U.S. Economist Michael Gapen forecasts the Federal Reserve will maintain current interest rates throughout 2025, deferring potential cuts until 2026 due to ongoing inflation concerns. [Source]

• Housing Market Shifts: Despite persistent high home prices averaging $422,800 nationally and mortgage rates near 7% into Q3 2025, rising inventory levels are expected to grant buyers increased negotiating power, signaling a potential shift towards neutral market conditions. [Source]

• Cash Sales Decline Signals Recovery: All-cash home purchases dropped to 36% of sales in early 2025, the lowest rate since 2021, particularly in new home sales, suggesting a potential recovery in the financing market. [Source]

• CMBS Volume Soars to New High: Commercial Mortgage-Backed Securities (CMBS) issuance reached a 15-year peak in the first half of 2025, with private-label volume hitting $59.55 billion, indicating a recovering commercial real estate financing market despite a Q2 decline. [Source]

• Investors Dominate Cash Home Buys: Real estate investors, especially small-scale landlords, comprised 30% of single-family home purchases in 2025, largely due to their ability to pay all-cash and thus avoid rising borrowing costs. [Source]

• Climate Drives Insurance Cost Surge: Homeowners insurance premiums have increased 8.7% faster than inflation between 2018-2022, largely due to climate threats, leading to 82% higher costs for those in high-risk zones and projected continued increases into 2025. [Source]

• Housing Markets Split Regionally: The U.S. housing market is experiencing a significant regional divide, with Southern states like Texas, Florida, Hawaii, and Washington D.C. seeing home price declines due to increased inventory and weaker demand, while the Northeast and Midwest continue to post strong growth. [Source]

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