- Pending home sales slumped in August, down 7.1% from July.
- High interest rates have pushed mortgage rates above 7%, which has impacted home buying.
- Pending home sales dropped in all four U.S. regions month-over-month and compared to one year ago.
“Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers,” said Lawrence Yun, NAR chief economist. “Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets.”
The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – sank 7.1% to 71.8 in August. Year over year, pending transactions fell by 18.7%. An index of 100 is equal to the level of contract activity in 2001.
“It’s clear that increased housing inventory and better interest rates are essential to revive the housing market,” added Yun.
The Northeast PHSI declined 0.9% from last month to 62.6, a reduction of 18.2% from August 2022. The Midwest index dropped 7.0% to 71.3 in August, down 19.1% from one year ago.
“The Federal Reserve must consider the sharply decelerating rent growth in its consideration of future monetary policy. There is no need to raise interest rates. “Moreover, the government shutdown will disrupt some home sales in the short run due to the lack of flood insurance or delays in government-backed mortgage issuance,” said Yun.
NOTE: Existing-Home Sales for September will be reported on October 19. The next Pending Home Sales Index will be on October 26. All release times are 10 a.m. Eastern. View the NAR Statistical News Release Schedule.