Pending home sales slipped to their lowest count in 23 years this summer, as the housing market continues to recover from a long-winded battle with affordability.
The National Association of Realtors’ Pending Home Sales Index (PHSI) fell to 70.2 last month – the lowest reading since the NAR began tracking contract signings in 2001. NAR's report echoed similar data released last week by Redfin.
"A sales recovery did not occur in midsummer," NAR Chief Economist Lawrence Yun commented. "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."
All four U.S. regions posted monthly transaction losses in July as pending home sales fell by 5.5% from the month prior. Year over year, pending transactions were down 8.5%.
“Contract signings fell to an all-time low in July,” First American Deputy Chief Economist Odeta Kushi said. “Pending sales are a forward-looking indicator of home sales based on contract signings. Purchase mortgage applications, another forward-looking indicator of home sales, confirms this disappointing news. Average monthly purchase applications have declined in July and August, despite a decline in mortgage rates and increase in housing inventory.”
Regionally, the Northeast fared better than other areas of the country. Its PHSI fell 1.4% from June to 64.6, an increase of 2.4% from July 2023.
The Midwest index reduced 7.8% to 67.8 in July, down 11.4% from one year ago.
The South PHSI sank 6.5% to 83.5 in July, falling 11.5% from the prior year.
The West index shrunk 3.8% in July to 56.2, down 6.0% from July 2023.
"In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months," Yun pointed out. "Current lower, falling mortgage rates will no doubt bring buyers into the market."
Kushi was less optimistic about July’s numbers.
“Modest improvements in affordability may not be enough to significantly boost demand, as household incomes remain stretched relative to mortgage payments,” Kushi said. “Homebuying will not pick up meaningfully until income growth begins to outpace home price growth and mortgage rates move lower."
