Key facts
- Pending home sales decreased by 5.4% in June compared to May.
- The NAR Pending Home Sales Index stood at 72.5 in June.
- Annual pending home sales were down 0.3% year-over-year.
- All four major U.S. regions experienced a month-over-month decline in pending sales.
- High mortgage rates and record home prices are cited as key factors impacting the market.
Pending home sales across the United States saw a significant decrease in June, falling 5.4% from the previous month to a reading of 72.5 on the National Association of Realtors (NAR) Pending Home Sales Index. This marks a 0.3% decline on an annual basis.
NAR's chief economist, Lawrence Yun, attributed the slowdown to the combination of mortgage rates reaching near-year highs and record-high national median home prices, creating a challenging environment, particularly for first-time buyers. He noted that pending contracts are indicators of future closed deals and do not perfectly align with economic impact.
Regionally, all four major areas experienced month-over-month declines. The Midwest saw the largest drop at 8.9%, followed by the West (4.7%), South (4.1%), and Northeast (3.0%). Annually, however, the Midwest and Northeast showed slight increases, while the South and West saw decreases.
Sam Williamson, senior economist at First American, stated that the broad-based decline suggests rising mortgage rates are impacting buyers' affordability. He pointed to softening mortgage purchase applications as another forward-looking indicator, with the seasonally adjusted purchase index falling to its lowest point since February. Williamson believes these factors are causing buyers and sellers to pause.
Despite the overall decline, some metropolitan areas reported strong annual increases in pending home sales, including Virginia Beach-Chesapeake-Norfolk, VA-NC (+15.4%), Sacramento-Roseville-Folsom, CA (+15.2%), and Kansas City, MO-KS (+14.4%).
Mike Miedler, brand president at Century 21, offered a nuanced view, suggesting the market is segmenting. He highlighted significant differences in inventory and price trends across cities like Chicago, Miami, San Francisco, and Seattle, indicating varied market dynamics rather than a uniform disappearance of demand.
Data from HousingWire indicated a slight year-over-year increase in pending single-family home sales as of early July. Williamson concluded that while structural supports like an easing lock-in effect and a resilient labor market exist, they are not strong enough to overcome high financing costs, suggesting a measured recovery pace until affordability improves.