Homes under contract saw a slight jolt in August as lower rates and the summer buying season ended on a high note, according to the latest data from the National Association of Realtors® (NAR).
NAR’s latest data found that pending home sales grew 4% month-over-month and 3.8% year-over-year, a reversal of the slight monthly downward trend seen in July.
NAR Chief Economist Lawrence Yun said that mortgage rates being at an 11-month low is “enabling more homebuyers to go under contract.”
Realtor.com® Senior Economic Research Analyst Hannah Jones added to Yun’s statement that while lower rates have provided some relief, “high housing costs continue to limit overall movement in the market.”
“Nevertheless, lower rates should provide some relief for homebuyers who have faced elevated borrowing costs in recent years, likely drawing some back into the market,” she continued.
Regionally, sales were up in all regions year-over-year, but varied monthly. While sales in the Midwest were up 8.7% monthly and 6.7% yearly, in the South they were up 3.1% monthly and 4.2% yearly. In the West they were up 5% monthly and 0.2% yearly. On the other hand, while sales in the Northeast were up 2.6% yearly, they were down 1.1% monthly.
As sales were up the highest in the Midwest both monthly and yearly, Yun clarified that the region’s “low mortgage rates combined with high levels of affordability are attracting more buyers compared to other regions.”
NAR’s report also noted that the August REALTORS® Confidence Index survey shows that 19% of members expect an increase in buyer traffic over the next three months, up from 16% last month and unchanged from one year ago. Meanwhile, 19% expect an increase in seller traffic, down from 21% last month and up from 18% in August 2024.
“As the Best Time to Buy approaches, home shoppers are set up to enjoy more favorable housing market conditions,” added Jones. “Typical seasonal trends, more inventory, less competition and lower prices, paired with easing mortgage rates, may create an attractive window for shoppers. Even so, affordability challenges remain significant, meaning recovery will likely be gradual rather than immediate.”
