SAEDNEWS: Pending US home sales fell unexpectedly in July as high mortgage rates and elevated home prices continued to weigh on buyers. The decline came alongside weaker housing construction, although stronger employment and lower mortgage rates could revive demand.
According to SaedNews: The US housing market showed renewed signs of weakness in July, with pending sales of existing homes falling unexpectedly, according to The Wall Street Journal.
The National Association of Realtors said its pending home sales index dropped 2.3% from June to 71.2, the lowest reading since January 2026. Economists had expected transactions to increase. The index, which tracks signed contracts before home purchases are finalized and is considered a leading housing indicator, was also down 2.2% from a year earlier.
Lawrence Yun, chief economist at the association, attributed the decline mainly to higher mortgage rates. He said the year’s highest borrowing costs reached the market in the middle of summer, discouraging buyers from signing contracts.
The 30-year fixed mortgage rate was about 6.77% during the period, remaining near its highest level in more than a year. Combined with elevated home prices, expensive borrowing has reduced household purchasing power and encouraged many buyers to wait for better conditions.
Pending sales declined across all four major US regions. The West recorded the sharpest monthly drop, at 4.7%, followed by the South at 2.2%, the Northeast at 2% and the Midwest at 0.7%. Year over year, pending sales in the West fell 7.1%, the largest regional decline.
The housing market is also changing in terms of supply and buyers’ negotiating power. Yun said home prices remain at unprecedented levels, leaving more properties on the market for longer. Fewer buyers are also offering above sellers’ asking prices than a year ago.
Weak sales are not the market’s only problem. Data released recently showed single-family housing starts fell 9.9% in July to their lowest level since November 2022. Overall housing starts, including multi-unit buildings, declined 12.4%.
Reuters reported that high mortgage rates and economic uncertainty caused by the recent war against Iran continue to pressure housing.
Still, the outlook is not entirely negative. Yun expects stronger employment to bring more buyers into the market in coming months, particularly if mortgage rates stabilize or fall.
Pending contracts are now about 30% below their 2019 level, before the COVID-19 pandemic, while employment is 5% higher. Yun said the gap points to significant pent-up demand that could return if supply improves and buyers regain purchasing power.
