Pending home sales decreased 0.4% in July compared with June but were up 0.7% compared with July 2024, according to the National Association of Realtors (NAR).
Month-over-month, contract signings declined in the Midwest and Northeast; were essentially flat in the South; and gained in the West.
Year-over-year, pending home sales increased in Midwest and South; but decreased in Northeast and West.
About 16% of NAR members says they expect an increase in buyer traffic over the next three months, unchanged from one year ago.
Meanwhile, 21% expect an increase in seller traffic, up from 17% in July 2024.
“Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant,” says Lawrence Yun, chief economist for NAR, in a statement. “Buying a home is often the most expensive purchase people will make in their lives. This means that going under contract is not a decision home buyers make quickly. Instead, people take their time to ensure the timing and home are right for them.”
“Rising mortgage applications for home purchase are an early indicator of more serious buyers in the marketplace, though many have not yet committed to a pending contract,” Yun adds. “The Federal Reserve signaling that they may enact a lower interest rate policy should steadily enlarge the pool of eligible home buyers in the upcoming months.”
First American Senior Economist Sam Williamson says the “slight dip in pending homes sales, on both a monthly and annual basis, signals continued buyer caution despite recent improvements in mortgage rates, affordability, and inventory.”
“Only the West region posted a monthly gain, where strong inventory growth is giving buyers more options and intensifying competition among sellers, keeping prices in check,” Williamson says in a statement.
“Even in markets with softer prices and more inventory, many clients are holding back,” he says. “The hesitation isn’t just about rates — it’s about confidence. Buying a home is the biggest financial decision most people make, and uncertainty around jobs, inflation, and the broader economy is keeping many on the sidelines.”
Williamson adds that while a Fed rate cut would ease borrowing costs and expand the pool of qualified buyers, “monetary policy moves slowly, and the impact won’t be immediate.”
“For now, caution dominates the housing market, with prospective buyers waiting for clearer signs of economic and financial security before committing,” he says.
Photo: Breno Assis