While small, 1% is the second monthly sales drop in a row, with 8 in the past 9 months. Year-to-year, contract signings fell by double digits in all four U.S. regions.
WASHINGTON – Pending home sales declined for the second consecutive month in July, and for the eighth time in the last nine months, according to the National Association of Realtors® (NAR).
Of the four major regions included in NAR’s monthly report, three registered month-over-month decreases, while the West notched a minor gain. Year-over-year, however, all four regions saw double-digit percentage slides, with the largest also in the West.
The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – slid 1.0% to 89.8 in July. Year-over-year, pending transactions sank 19.9%. An index of 100 is equal to the level of contract activity in 2001.
“In terms of the current housing cycle, we may be at or close to the bottom in contract signings,” says NAR Chief Economist Lawrence Yun. “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.”
In June, housing affordability plummeted to its lowest level since 1989, according to NAR. Accounting for a 30-year fixed-rate mortgage and a 20% down payment, the monthly mortgage payment on a typical home jumped to $1,944 – a year-to-year increase of 54%, or $679.
“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 says. “With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next year.”
Pending home sales regional breakdown: The Northeast PHSI dipped 1.9% from last month to 79.3, and it’d down 15.4% from July 2021. The Midwest index retracted 2.7% to 91.2 in July, a 13.4% decline year-to-year.
The South PHSI decreased 1.1% to 106.6 in July, a pullback of 20.0% from the previous year. The West index increased 2.2% in July to 70.0, down 30.1% year-to-year.
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