Pending home sales decreased 5.5% in July compared with June and were down 8.5% compared with July 2023, as mortgage rates and home prices remained stubbornly high, according to the National Association of Realtors (NAR).
Regionally, and month over month, contract signings decreased 1.4% in the Northeast, 7.8% in the Midwest, 6.5% in the South and 3.8% in the West.
Year over year, pending home sales fell 2.4% in the Northeast, 11.4% in the Midwest, 11.5% in the South and 6% in the West.
As a result, the Pending Home Sales Index (PHSI) fell to a score of 70.2 – the lowest reading since the index began tracking in 2001.
“A sales recovery did not occur in midsummer,” says Lawrence Yun, chief economist for NAR, in a statement. “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election.
“In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months,” Yun adds. “Current lower, falling mortgage rates will no doubt bring buyers into market.”
In a separate statement, Molly Boesel, principal economist, CoreLogic, says “high mortgage interest rates continue to challenge the housing market, although we do anticipate a rate cut next month. This will lead to an uptick in refinances as most borrowers with mortgage rates above 6.5 percent originated their loans within the last two years, and they will likely refinance as mortgage rates fall. One interesting trend we’ve noticed is that buyers are picking bigger houses. The average living area of a home purchased in July increased to 1,885 square feet, up 2% from both July 2023 and July 2022, regaining the level seen in 2021.”
Photo: Gabrielle Henderson