Pending home sales in July have plummeted to an all-time low, marking the lowest point in 23 years of tracking data. According to the National Association of Realtors (NAR), contract signings dropped by 5.5 percent from the previous month, resulting in a dismal index score of 70.2—the lowest since this measure was introduced in 2001.
Compared to last year, pending transactions fell 8.5 percent in July. This decline was widespread, affecting all regions, with the sole exception being the Northeast, which recorded a slight annual increase in contract activity. NAR's chief economist, Lawrence Yun, noted that even with positive job growth and a more substantial inventory of homes for sale, ongoing affordability issues continue to hinder the market.
A key factor in these affordability challenges is home pricing. The NAR's recent report on existing home sales highlighted that the median sale price for these homes rose by 4.2 percent year-over-year to $422,600, marking the 13th consecutive month of price increases. All four regions in the United States experienced price growth.
However, there is reason for cautious optimism. Yun believes that “falling mortgage rates will no doubt bring buyers into the market.” This week, mortgage rates dipped to their lowest level in 14 months, with the possibility of further decreases if the Federal Reserve cuts the federal funds rate, as indicated by Fed chair Jerome Powell in recent comments.
Additionally, the number of homes available for sale at the end of July was 1.33 million, representing nearly a 20 percent increase from the previous year.
Both Yun and NerdWallet mortgage expert Kate Wood suggested that potential buyers and sellers could be taking a wait-and-see approach as the 2024 presidential election draws nearer. However, several housing economists recently mentioned to The Real Deal that there is no empirical evidence to suggest that election years have any significant impact on the housing market.
