The number of contract signings dropped this July, per the National Association of Realtors® (NAR).
NAR found that nationally, pending home sales fell 0.4% compared to June, but were still up 0.7% compared to this time last year. As also shown by reported new-home sales in July, sales have not accelerated despite increasing inventory.
“Even with modest improvements in mortgage rates, housing affordability and inventory, buyers still remain hesitant,” said NAR Chief Economist Lawrence Yun in a statement.
Yun pointed to recent reports of a higher number of mortgage applications as “an early indicator of more serious buyers in the marketplace, though many have not yet committed to a pending contract.”
Bright MLS Chief Economist Lisa Sturtevant said in a statement that the current housing market is favoring neither buyers, who face high prices and other unaffordability, nor sellers, who are not receiving offers in line with their price expectations.
“After being decidedly a seller’s market for years, the housing market is shifting. But it is too early to call the market a buyer’s market. Instead, we are in a ‘stuck’ market, which is likely where we will stay as we head into fall,” said Sturtevant.
Realtor.com® Senior Economist Jake Krimmel similarly described the housing market as “stuck in neutral” due to buyers continuing to face unaffordability while sellers aren’t adjusting expectations. Krimmel further claimed that the trending down of pending home sales, which is a forward looking metric, could mean the bump in existing-home sales during July will “revert to trend,” and that growth on the inventory side could retract in coming months due to seller reticence.
Krimmel described this pending home sales data as a “much-needed mean reversion” for the housing market following a sluggish summer in the context of a 2.8% drop in pending sales last month.
“Inventory grew again in July, but is now showing early signs of leveling off,” said Krimmel. “New listings have declined every month since April while delistings have risen, suggesting some sellers are choosing to step back from the market rather than lower prices further.”
Federal Reserve Chair Jerome Powell has signaled the central bank will vote to cut interest rates at its September Federal Open Market Committee (FOMC) meeting (while still leaving room to change course based on new data). Yun claimed that lower interest rates “should steadily enlarge the pool of eligible homebuyers in the upcoming months.”
Sturtevant agreed the Fed is likely to cut interest rates in September, but was more cautious about the impact or possible market boost from them.
“It is not at all certain that mortgage rates are going to come down (if the Fed cuts interest rates). As a result, buyers and sellers are still going to be cautious and the market could remain gridlocked this fall,” she said.
According to the NAR REALTORS® Confidence Index, 16% of NAR members expect buyer traffic to increase in the next three months (unchanged from last year), while 21% of members expect seller traffic to increase (compared to 17% a year prior).
Regional breakdown
Of the four major U.S. census regions, the Northeast is the only one that saw a drop in pending home sales both month-over-month and year-over-year (down 0.6% by both measures).
The West saw a 3.7% monthly increase in pending home sales during July, but this was still 1.9% lower than the year before.
Conversely, the South posted a slight monthly decline in pending home sales (0.1%), but an annual increase of 1.8%.
The Midwest similarly saw a 4% drop in pending sales compared to June, but a 1.3% increase compared to July 2024.
For the full NAR Pending Home Sales Index, click here.
