The National Association of REALTORS®’ (NAR) latest report on pending home sales found a 5.5% drop-off in July 2024. Compared to July 2023, the decline is even steeper at 8.5%.
In June, pending sales reversed a three-month decline and rose 4.8%. July also saw the first increase in existing-home sales in four months. Those hoping this upswing would continue into an ongoing trend will doubtlessly be disappointed.
NAR Chief Economist Lawrence Yun explained these results in the association’s press release: “A sales recovery did not occur in midsummer. 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.”
Housing inventory is indeed, per Realtor.com®, at its highest level since 2020, and mortgage rates have continued to fall below 7%.
Despite those promising signs, these pending home sale results were not unforeseen. Commenting before the report was released, CoreLogic Principal Economist Molly Boesel offered a preliminary expectation of the lower-than-expected results:
“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% 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.”
Regional breakdown
On a regional basis, all four main U.S. census regions (Northeast, South, Midwest and West) posted declining sales month-over-month. Year-over-year, only the Northeast showed improvement at a 2.4% increase in pending home sales. Other regions also posted declines.
Specific numbers for regional pending home sales in July are as follows for June to July 2024 changes:
Northeast: -1.4%
South: -6.5%
Midwest: -7.8%
West: -3.8%
Year-over-year regional results:
Northeast: +2.4%
South: -11.5%
Midwest: -11.4%
West: -6%
Cumulatively, the Northeast is showing the greatest decline in pending home sales and the Midwest is showing the most.For NAR’s full pending home sales report, click here.
