Pending Home Sales Fall Despite Lower Mortgage Rates


After two straight monthly gains, pending home sales unexpectedly dropped in July.

The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI fell 2.5% from 108.3 in June to 105.6 in July, largest monthly drop since March 2018. On a year-over-year basis, sales were 0.3% lower than a year ago.

Regionally, all four major regions saw a decline in the PHSI, ranging from a decrease of 1.6% in the Northeast to 3.4% in the West. Year over year, the PHSI in the Northeast and Midwest fell 0.9% and 1.2%, while sales in the South and West rose 0.1% and 0.3%.

NAR suggests economic uncertainty may help to explain why homebuyer demand is not consistent with lower mortgage rates. Meanwhile, a sizeable growth in inventory is urgently needed, as continuing tight inventory will drive up home prices, making access to homeownership more difficult.

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