After tumbling in April, and rebounding modestly in June, analysts expected a continued gain in pending home sales in July, but it wasn't meant to be: moments ago the NAR reported that in July, Pending Home Sales tumbled 5.5% MoM, a huge miss to the 0.2% expected gain (and down from a 4.8% increase in June), and also slumped 4.6% YoY, a modest improvement from the 7.8% plunged in June but also missing expectations of a -2.0% drop.

That dragged the Pending home sales index to 70.2%, a fresh record low.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

"A sales recovery did not occur in midsummer. 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," NAR Chief Economist Lawrence Yun said in a statement.

Sales decreased in all four US regions, especially in the Midwest and South. The Northeast registered the smallest decline last month, and Yun noted the New England region has performed better than others recently.

• The Northeast PHSI waned 1.4% from last month to 64.6, an increase of 2.4% from July 2023. The Midwest index reduced 7.8% to 67.8 in July, down 11.4% from one year ago.
• The South PHSI sank 6.5% to 83.5 in July, falling 11.5% from the prior year. The West index shrunk 3.8% in July to 56.2, down 6.0% from July 2023.

"In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months," added Yun. "Current lower, falling mortgage rates will no doubt bring buyers into market" said the NAR chief economist, although we have yet to actually see modestly lower mortgage rates translate into more buying.

The previously owned home market has been hamstrung by high borrowing costs and collapsing inventory for nearly two years. While mortgage rates have declined this month to the lowest in over a year, high prices and limited inventory are deterring prospective buyers who might still be holding out for cheaper rates.

The rate on a 30-year fixed mortgage is now below 6.5% in the wake of recent comments from Jerome Powell, who said last week “the time has come” for the central bank to cut interest rates.

Lower borrowing costs would help ease one the least affordable housing markets in history. An index of US home prices by S&P CoreLogic Case-Shiller hit a fresh record on Tuesday, with prices up 5.4% in the year through June.