Buyers Pulled Back Again in July
Pending home sales fell 2.3% in July, dropping the national index to 71.2 and marking its lowest level since January, according to the National Association of Realtors’ latest Pending Home Sales Report. The index, which tracks signed contracts on existing homes rather than closings, is also down 2.2% compared to a year earlier.
The pullback was not evenly spread across the country. NAR’s regional data shows the West fell hardest, down 4.7% for the month and 7.1% year-over-year, followed by the South, down 2.2% monthly and 3.0% annually. The Northeast slipped 2.0% for the month, while the Midwest was the lone bright spot, edging up 1.7% compared with a year earlier even as it dipped slightly month-over-month.
NAR chief economist Lawrence Yun tied the drop directly to borrowing costs and prices colliding at the worst possible moment for buyers. “The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings,” Yun said in NAR’s release. “Home prices are at record highs so houses for sale are sitting on the market longer.”
Pending sales are considered a leading indicator, since a signed contract typically closes within one to two months, which means July’s decline points toward softer closed-sale numbers later this fall rather than an immediate market shock. That said, Yun also pointed to a demand gap that suggests the slowdown reflects affordability strain rather than a lack of interest in buying. “Pending contracts are 30% below their pre-pandemic 2019 level, while payroll employment is 5% above,” he said. “That gap points to sizable pent-up demand.”
Not every market moved in the same direction. NAR’s data shows Virginia Beach-Chesapeake-Norfolk posted a 17.2% year-over-year gain in pending sales, with San Antonio-New Braunfels up 11.8% and Cincinnati up 6.2%, evidence that buyers in relatively more affordable metros are still willing to sign when the math works. For now, the national picture is one of buyers waiting out both rates and prices at once, and July’s numbers suggest that wait is not over yet.
Reading the regional split correctly
The West’s steep decline is worth sitting with on its own, since it’s the sharpest of any region in NAR’s report and lines up with some of the country’s most expensive metros, where a small move in mortgage rates translates into a much larger swing in monthly payment than it does in a lower-priced market. The Midwest’s modest annual gain, by contrast, is a reminder that affordability, not sentiment alone, is still doing most of the work in determining where buyers are willing to sign. A market where the math still pencils out is pulling in contracts even in a summer defined nationally by pullback.
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