Pending home sales decreased 1 percent between June and July, a modest decline compared to recent months but the eighth out the past 10 months in which pending transactions fell, according to data released Wednesday.
Pending transactions were down 19.9 percent year over year, according to the data released by the National Association of Realtors, which reported that the Pending Home Sales Index dropped to 89.8 percent in July.
The decrease of one percent was modest compared to recent declines, including in June, which shouldered an 8.6-percent dip. Economists pegged this to the relative stabilization of mortgage rates, which retreated slightly during July. after jumping closer to six percent.
“In terms of the current housing cycle, we may be at or close to the bottom in contract signings,” NAR Chief Economist Lawrence Yun said in a statement. “This month’s very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity.”
While the decline in July was less dramatic than in previous months, it does bring pending sales to their lowest point since April 2020 at the height of the pandemic, according to data from Realtor.com.
Pending home sales are a measure of the number of homes that went into contract during a given month, and are used to determine the health of a market in the months to come.
According to NAR, July saw housing affordability continue to plummet to its lowest levels since the late 1980s, with the typical monthly mortgage payment leaping 54 percent annually to $1,944.
“Home prices are still rising by double-digit percentages year-over-year, but annual price appreciation should moderate to the typical rate of 5% by the end of this year and into 2023,” Yun said. “With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next year.”
The West charted the biggest annual drop of 30 percent, while charting a 2.2 percent annual increase. In the Northeast, pending sales dropped 1.9 percent monthly and 15.4 percent annually. Pending sales in the Midwest pulled back 2.7 percent from the previous month and 13.4 percent from the previous year, while the South saw a 20 percent annual decline and a monthly decline of 1.1 percent.