Pending home sales in August rose 0.6%, following a 5.5% drop-off in July, according to the National Association of REALTORS® (NAR). The Midwest, South and West posted monthly gains in transactions, while the Northeast recorded a loss. Year-over-year, the West registered growth, but the Northeast, Midwest and South declined.
Year-over-year, pending transactions were down 3%.
“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August,” said NAR Chief Economist Lawrence Yun. “However, contract signings remain near cyclical lows even as home prices keep marching to new record highs.”
PHS regional breakdown
Pending sales in the Northeast diminished 4.6% from last month, a drop of 2.2% from August 2023. The Midwest intensified 3.2% in August, down 3.6% from one year ago. The South grew 0.1% in August, receding 5.3% from the prior year. The West increased 3.2% in August, up 2.7% from August 2023.
“In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months,” Yun said. “Contract signings rose in both the most affordable and most expensive regions—the Midwest and West, respectively—because mortgage rates have fallen nationally. Housing affordability will continue to see notable improvements.
“The Federal Reserve does not directly control mortgage rates, but the anticipation of more short-term interest rate cuts has pushed long-term mortgage rates down to near 6% in late September,” added Yun. “On a typical $300,000 mortgage, that translates to approximately $300 per month in mortgage payment savings compared to a few months ago.”
“Mortgage rates fell from 6.7% to 6.4% in the month of August, reaching the lowest level in over a year, but not quite low enough to entice buyers,” said Realtor.com Sr. Economic Research Analyst Hannah Jones. “Rates have since fallen to 6.09%, their lowest level in 2 years, which is likely to stoke demand moving forward. New home sales, which are also based on contract signings, fell 4.7% in August, but were up year-over-year as buyers showed still-strong interest in available new home inventory, which has shifted toward smaller and more affordable. Despite having more buying power and more for-sale home options, buyers are proceeding cautiously, perhaps waiting to see homeownership costs soften further.”
