Consumers looking for a signal that the housing market is turning a corner won’t find it in the most recent data on pending sales of previously owned single-family houses and condos.
Contracts to sell homes, which typically are followed by closings within one or two months, fell 0.4% in July from a month earlier, according to the National Association of Realtors. That’s despite recent reports of a growing number of homes for sale, moderating prices and an uptick in buyers applying for mortgages.
“It is too early to call the market a buyer’s market," Lisa Sturtevant, chief economist for the mid-Atlantic-based Bright MLS, said in a statement. "Instead, we are in a 'stuck' market, which is likely where we will stay as we head into fall."
Sellers are feeling stuck because they aren’t getting the offers they want at their desired prices, she said, while buyers are holding back because prices still feel too high.
The outlier among the four major U.S. regions in July’s pending sales report was the West, which, along with the South, saw minimal price hikes and some decreases in major markets last month compared to 2024. Contracts to sell homes rose in the West by 3.7% in July, while they fell slightly elsewhere. The South barely changed, with contracts down 0.1%.
Pending sales did rise by almost 1% across the United States from one year earlier. Deals increased 1.8% in the South and 1.3% in the Midwest, while falling about 2% in the West and 1% in the Northeast.
A potential sign that sales will rise in the next few months is that mortgage applications to buy homes are rising. Last week was their strongest in more than a month, according to the Mortgage Bankers Association, which said in a statement that buyers seem to be responding to the larger number of homes for sale and cooling prices.
Many housing market observers are also watching to see if the Federal Reserve Board goes ahead with an interest rate cut when it meets in September. Lawrence Yun, the NAR’s chief economist, said in the group's pending sales report that the Fed’s signals that it will cut its key rate “should steadily enlarge the pool of eligible homebuyers.”
But Sturtevant pointed out that there’s no guarantee that a Fed rate cut will lead to mortgage rate reductions that could bring more buyers to the negotiating table. The Fed does not directly influence what consumers pay for home loans.
Yun said it’s reasonable, given current economic conditions, for people to remain hesitant about taking the plunge into homeownership.
“Buying a home is often the most expensive purchase people will make in their lives,” he said. “This means that going under contract is not a decision homebuyers make quickly. Instead, people take their time to ensure the timing and home are right for them.”
