Pending home sales tank in July, but the slump is likely short lived
Mortgage rates are finally dropping, but pending home sales fell even further into the toilet in July.
That’s according to the July pending home sales index from the National Association of Realtors. On an annual basis, the index fell by 8.5% to the second lowest seasonally adjusted rate in the data’s history, topping only April of 2020 when the market was frozen by the pandemic.
The index fell by 5.5% month over month to 70.2. Anything above 100 is considered to have a higher level of activity relative to 2001.
“A sales recovery did not occur in midsummer,” said NAR Chief Economist Lawrence Yun in a statement. “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election.”
In addition to the election, there are a number of reasons why buyers might be hesitant to jump back into the market. While rates are falling, they’re still high relative to recent history. With the Federal Reserve almost certain to cut rates in September, buyers might do well to wait a couple months.
Some buyers also are considering the recent rule changes related to the $418 million settlement of antitrust lawsuits signed by NAR. Buyers are accustomed to sellers paying for their agents, so shoppers who’ve bought a home before feel uncertain about how to navigate the new landscape.
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