Pending home sales in July reached a low never before seen in 23 years of record-keeping.
Contract signings fell 5.5 percent from the previous month, according to a report from the National Association of Realtors. The trade group’s index for the metric was a paltry 70.2, the lowest since the metric debuted in 2001.
Pending transactions, which offer a preview of future sales activity, were 8.5 percent lower in July than they were a year ago. No region was spared from the monthly decline in contract activity and only the Northeast showed an annual increase.
NAR chief economist Lawrence Yun stated that even positive job growth and a more robust inventory of for-sale homes were not enough to overcome persistent affordability challenges.
One of those challenges is the price of homes, as NAR pointed out in a recent report on sales of existing homes. In July, the median sale price of those homes, as opposed to new construction, rose 4.2 percent year-over-year to $422,600, the 13th straight month of annual increases. All four regions in the U.S. saw prices rise.
There is hope for the future, according to Yun, as “falling mortgage rates will no doubt bring buyers into [the] market.” This week, mortgage rates fell to their lowest level in 14 months, and could go lower yet if the Federal Reserve cuts the federal funds rate, as Fed chair Jerome Powell recently signaled it would in September.
Another glimmer of optimism for the home-sales industry: For-sale inventory at the end of July was 1.33 million homes, an increase of nearly 20 percent year-over-year.
Yun and NerdWallet mortgage expert Kate Wood alluded to the possibility that potential buyers and sellers may be adopting a wait-and-see approach as the 2024 presidential election nears. Several housing economists, however, recently told The Real Deal they’ve found no empirical evidence that election years have any effect on the housing market.
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