The housing market is in the absolute dumps

Data: National Association of Realtors; Chart: Axios VisualsEven as the stock market approaches an all-time high, there is a big dark cloud hovering over the economy: the housing market.Why it matters: Home sales are hovering at historic lows, as economic uncertainty and high mortgage rates hold back buying.By the numbers: Pending home sales — deals that are in contract but not yet closed — rose 1.8% in May over last month but are still at record lows, per data from the National Association of Realtors released Thursday. The only other time over the past 20 years that pending home sales have been this low was in 2020, when COVID briefly froze the real estate market.Zoom in: Other indicators are flashing terrible, too. Existing home sales fell year-over-year in May to their slowest pace since 2009 (when the market was in tatters during the financial crisis), per NAR.Home prices are now rising at the slowest annual pace in two years, per Case-Shiller data.Housing starts, or new homes beginning construction, dropped nearly 10% in May, the weakest since May 2020 — a sign that home builders are losing confidence in the economy.Zoom out: Even so, the news about a slight increase in pending sales cheered the sad Realtors — who've been seeing historically depressed home sales for a couple of years now. "The bottom in home sales appears to be over with the possibility of a strong upswing once mortgage rates decline," NAR chief economist Lawrence Yun said in a statement — though he cautioned that the market is seeing higher-than-normal cancellation rates and last-minute cold feet.In other words, even the little bit of good news comes with a big caveat.The big picture: There's not much to like in real estate right now: news of ICE enforcement actions at home building sites, tariffs raising the price of construction materials, and of course, weak demand in general. "It's less about mortgage rates, and more about economic uncertainty," says Eric Finnigan, vice president of demographics research at John Burns, the real estate consulting firm. Folks are nervous about the job market, in particular. The intrigue: There's a new kind of golden handcuff holding back the market, he says. Sellers are chained to their inflated home values. Many have seen their Zestimates rise by 50% or more since 2020."They see that as money in the bank," he says, and they're not willing to go lower. "There's just less urgency to move."Between the lines: As home builders contend with a freezing sales market, ICE is making things even more chilly. In a recent survey of home builders, conducted by Zonda, some companies reported that the immigration enforcement agency is starting to visit job sites. Visits from ICE have impacted workforce participation, they said. Any time there's an ICE visit, builders tend to see more "no-shows" as workers — even those who are here lawfully — worry about getting caught in the net of the federal government.The industry didn't comprehend how many negative hits housing would face from White House policies this year, says Ali Wolf, chief economist at Zonda.The bottom line: "The housing industry is already riddled with challenges," Wolf says. "And I don't think we realized how many more we were going to face."

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