Pending home sales slip 1% in July, but Realtors say market may be ‘at or close to the bottom’

Pending home sales, a measure of signed contracts on existing homes, slipped 1% from June to July, according to the National Association of Realtors. Compared with a year ago, sales were down 19.9%.

The figure, a future indicator of closed sales, has fallen for eight of the past nine months as rising mortgage rates made housing less affordable. Higher rates pushed the typical mortgage payment up by 54% from a year ago, according to the NAR.

The drop in sales was smaller than previous months and could be a sign of the market settling, even if for a brief period.

“We may be at or close to the bottom in contract signings,” said Lawrence Yun, chief economist for the Realtors association. “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.”

Mortgage rates have been climbing steadily this year, peaking in June before dropping slightly in July. Rates resumed their rise this week and are now approaching 6% again, according to Mortgage News Daily.

Regionally, pending home sales in the Northeast fell 1.9% for the month and were down 15.4% from July 2021. In the Midwest, sales dropped 2.7% monthly and are down 13.4% year over year.

The South saw sales decline 1.1% from the previous month and 20% from a year ago. The West was the only region to see a monthly gain, up 2.2%. But sales were still down 30.1% from July 2021.