Pending home sales fell sharply in June as mortgage rates climbed to their highest level in nearly a year, according to the National Association of REALTORS® (NAR), which reported its Pending Home Sales Index declined 5.4% month over month in June and slipped 0.3% from a year earlier. The report measures existing-home purchase contracts that have been signed but not yet closed, making it a leading indicator of future existing-home sales.
"The highest mortgage rates in nearly a year and the record-high national median home price together are contributing to a tepid housing market that is especially difficult for first-time homebuyers," said NAR Chief Economist Lawrence Yun. "However, job gains can help support housing demand."
Pending sales declined in all four major U.S. regions compared with May. On an annual basis, contract activity increased in the Northeast and Midwest but declined in the South and West.
The Northeast posted a 3.0% monthly decline but remained up 2.2% year over year. The Midwest recorded the largest monthly drop at 8.9%, though contracts edged 0.3% higher than a year ago.
In the South, pending sales fell 4.1% from May and 0.9% annually, while the West declined 4.7% month over month and 1.1% from June 2025.
Yun cautioned against viewing pending contracts as a direct measure of housing-market activity.
"It is worth emphasizing that it is closing activity, not contract signings, that generates economic impact," he said. "Pending contracts are only suggestive of upcoming closed deals and do not align perfectly, due to fallout rates and contract contingencies."
Among the nation's 50 largest metro areas, the strongest year-over-year gains in pending sales were concentrated in markets including Virginia Beach, Sacramento, Kansas City, Richmond, Buffalo, Austin, San Francisco, Los Angeles, Miami, and St. Louis.
What It Means
Mortgage applications and contract activity have shown signs of improvement whenever rates ease, but June shows that momentum can fade quickly when borrowing costs rise. Combined with record home prices, elevated mortgage rates continue to squeeze affordability for entry-level buyers, leaving many prospective borrowers on the sidelines.
For loan officers, the data suggests purchase opportunities have not disappeared — they have become increasingly competitive. Originators who focus on payment strategies, down payment assistance programs, temporary buydowns, and financing options that improve affordability may be better positioned to convert hesitant shoppers into borrowers while the market waits for a more favorable rate environment.
