U.S. Pending Home Sales Decrease by 2.3% in July Amidst 6.7% Mortgage Rates

[Mexico City = Shim Young-jae, Correspondent] Pending home sales in the U.S. for July decreased due to the highest mortgage rates of the year and record-high home prices. Since home purchase contracts are typically signed one to two months before actual transactions, this decline is interpreted as an indicator of a slowdown in U.S. home sales in the second half of the year.

According to the National Association of Realtors (NAR) on the 18th (local time), pending home sales in July fell by 2.3% compared to the previous month and by 2.2% compared to the same month last year. The index has dropped to its lowest level since January 2026, with all four regions of the U.S. seeing a decrease in contract numbers compared to the previous month.

Mortgage Rates at 6.7%... Summer Housing Contracts Shrink

According to Yahoo Finance, U.S. mortgage rates rose throughout July, reaching about 6.7% by the end of the month, the highest level in 2026.

Yahoo Finance explained that the rise in mortgage rates in July was due to the resurgence of tensions between the U.S. and Iran, which led to an increase in international oil prices.

High interest rates are further diminishing purchasing power, already strained by high home prices. Some buyers lacking purchasing power have withdrawn from the market, resulting in fewer contracts being signed.

Lawrence Yun, NAR's chief economist, stated, "The highest mortgage rates of the year are occurring in the summer, pulling down contract signings." He added, "With home prices at record highs, listings are staying on the market longer, and there are fewer buyers offering prices above asking compared to last year," noting significant regional differences.

Pending home sales are a leading indicator that counts homes under contract. Since it typically takes one to two months for actual sales to be completed after contracts are signed, it is used to gauge the future direction of existing home sales.

Decrease Across All U.S. Regions Compared to Last Month... West Sees a 4.7% Drop

According to NAR, pending home sales in July decreased across all four major regions of the U.S. compared to the previous month.

The Northeast saw a 2.0% decrease from the previous month and a 0.2% decrease from the same month last year.

The Midwest experienced a 0.7% decrease from the previous month but a 1.7% increase from the same month last year. Among the four regions, only the Midwest showed an increase compared to the previous year.

The South saw a 2.2% decrease from the previous month and a 3.0% decrease from the same month last year.

The West experienced the largest decline, with a 4.7% decrease from the previous month and a 7.1% drop from the same month last year.

Yahoo Finance noted that the Midwest is relatively the most affordable region for housing among the major U.S. regions, indicating that only areas with lower price burdens saw an increase in contracts compared to the previous year.

Increasing Differences Among Major Cities... Virginia Beach Sees 17.2% Increase

Despite the nationwide decline, some major cities recorded significant increases in contracts.

According to data from Realtor.com Economics cited by NAR, pending home sales in the Virginia Beach, Chesapeake, and Norfolk areas increased by 17.2% year-over-year, marking the highest growth rate.

San Antonio and New Braunfels in Texas saw an 11.8% increase.

Cincinnati recorded a 6.2% increase, Pittsburgh a 3.7% increase, and Miami, Fort Lauderdale, and West Palm Beach saw a 2.4% increase.

Austin, Round Rock, and San Marcos had a 1.6% increase, while Buffalo and Cheektowaga saw a 1.3% increase.

St. Louis and Jacksonville each increased by 1.2%, and Columbus saw a 0.2% increase.

While national indicators showed a decline, the data illustrates that contract flows vary significantly based on local housing supply, prices, and employment conditions.

"Contracts 30% Lower Than Pre-Pandemic Levels"... Employment Up 5%

NAR assesses that there is significant pent-up demand in the current housing market.

According to Chief Economist Yun, pending home sales are currently 30% lower than in 2019, prior to the COVID-19 pandemic.

In contrast, non-farm employment in the U.S. has increased by 5% based on the same criteria.

Yun explained that this gap indicates a substantial amount of suppressed demand from those who wish to buy homes but cannot enter the market due to high prices and financial costs.

He stated, "The increase in employment could attract more buyers to the market, especially if mortgage rates stabilize or decrease, but this will take time." He added, "If housing supply increases and purchasing power improves, a significant amount of pent-up demand could be released in the future."

Key Focus After August Will Be Interest Rates... "Is This a Seasonal Slowdown or Will It Persist?"

The market is paying attention to whether this slowdown is a temporary seasonal factor or a long-term trend.

Hannah Jones, Chief Economist at Realtor.com, told Yahoo Finance, "As we move into August, the key question is whether the current slowdown is seasonal or if it will last longer."

Currently, the U.S. housing market is structured in a way that high home prices and high mortgage rates are simultaneously suppressing demand.

With mortgage rates rising to about 6.7% at the end of last month, the monthly repayment burden on buyers has increased. With home prices remaining at record highs, the time taken to finalize transactions is also lengthening.

However, NAR views the increase in employment and pent-up demand as recovery factors for the future.

The direction of the U.S. housing market is expected to depend on whether mortgage rates stabilize and how much housing supply increases. If the burden of interest rates does not ease, the decline in contracts in July could lead to a decrease in actual home sales in the future.