Pending Home Sales Drop 5.4% in June

Pending home sales decreased by 5.4% in June, according to data released by the National Association of Realtors (NAR) on Thursday. The NAR's Pending Home Sales index registered 72.5 for the month, marking a 0.3% decline compared to the same period last year. This slowdown is attributed to the highest mortgage rates seen in nearly a year, combined with record-high national median home prices, creating a challenging market, particularly for first-time homebuyers. NAR's chief economist, Lawrence Yun, stated that while pending contracts indicate future sales, actual economic impact comes from closed deals, and contract signings do not perfectly predict closings due to fallout rates and contingencies.

Regionally, all four major areas experienced month-over-month declines in pending home sales. The Midwest saw the largest drop at 8.9%, followed by the West with a 4.7% decrease, the South with a 3.0% decline, and the Northeast with a 2.2% decrease. On an annual basis, the Midwest and Northeast saw increases of 0.3% and 2.2% respectively, while the South and West experienced decreases of 0.9% and 1.1%.

Sam Williamson, First American's senior economist, noted that the widespread decline in contract signings across all regions suggests that rising mortgage rates are impacting buyers' affordability. He further pointed to other indicators, such as mortgage purchase applications, which have softened in recent weeks after increasing in the spring. The seasonally adjusted purchase index for mortgage applications fell to approximately 157 in mid-July, its lowest point since February, reinforcing the trend of buyers and sellers becoming more cautious.