Home Sales Show Slowing Demand Amid Rising Mortgage Rates

US home sales are showing positive year-over-year growth, but demand is slowing down as mortgage rates approach 7%. Last week, mortgage rates reached a yearly high. Historically, when rates surpass 6.64% and break 7%, housing demand typically decelerates. Since the start of 2023, sales data has fluctuated with mortgage rates, but demand has remained firm when rates stayed below 6.64% and hovered near 6%.

Pending home sales data, which reflects sales typically 30-60 days later, indicates a slowdown. Two weeks ago, there was a slight year-over-year decline in pending sales, followed by a marginal increase last week. However, the growth rate has significantly cooled. For the last week, pending home sales were 70,748 in 2026, compared to 70,609 in 2025. The overall pending home sales data, representing an average rather than weekly fluctuations, also shows slowing growth, with 396,759 sales in 2026 versus 384,307 in 2025.

Mortgage purchase application data further supports this trend. While this week saw a seasonal 6% increase week-to-week following a 7% decline two weeks prior (attributed to the July 4th holiday), the year-over-year growth was only 0.2%. This minimal year-over-year increase suggests a market deceleration. As the year progresses and comparative data becomes more challenging due to potentially higher rates, further slowing in the housing market is anticipated.