Contract signings on U.S. homes fell for the second straight month in July as mortgage rates climbed to their highest level of the year, the National Association of Realtors reported Tuesday, the latest sign that this summer’s rate spike is weighing on the housing market.
NAR’s Pending Home Sales Index fell 2.3% month over month to 71.2 in July, down 2.2% from a year earlier and the lowest reading since January, according to the association’s newsroom release. The index, based on signed contracts rather than closings, is considered a forward-looking indicator of home sales expected to close over the following one to two months. All four major U.S. regions posted month-over-month declines.
NAR Chief Economist Lawrence Yun tied the pullback directly to financing costs. “The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings,” Yun said. He added that “pending contracts are 30% below their pre-pandemic 2019 level, while payroll employment is 5% above,” a gap he has used in prior reports to argue the housing market remains structurally undersupplied relative to the broader economy even as near-term activity softens. Yun also pointed to record-high home prices as a factor keeping listings on the market longer, noting fewer buyers are bidding above asking price than a year ago, though he cautioned there is wide variation by local market.
Regionally, the West posted the steepest month-over-month decline, down 4.7% to an index reading of 52.7 and down 7.1% from a year earlier. The South fell 2.2% month over month to 85.0, down 3.0% year over year. The Northeast slipped 2.0% to 64.5, down 0.2% annually. The Midwest posted the smallest monthly decline, down 0.7% to 73.3, and was the only region to show a year-over-year gain, up 1.7%.
Despite the national pullback, NAR’s data showed pockets of local strength. Virginia Beach-Chesapeake-Norfolk, Va.-N.C., led all metro areas with pending sales up 17.2% year over year, followed by San Antonio-New Braunfels, Texas (+11.8%) and Cincinnati, Ohio-Ky.-Ind. (+6.2%). Pittsburgh, Pa. (+3.7%) and Miami-Fort Lauderdale-West Palm Beach, Fla. (+2.4%) also posted year-over-year gains, along with Austin-Round Rock-San Marcos, Texas; Buffalo-Cheektowaga, N.Y.; St. Louis, Mo.-Ill.; Jacksonville, Fla.; and Columbus, Ohio.
What it means: Verified facts: pending sales fell nationally and in every region month over month, with the West weakest and the Midwest most resilient. Attributed interpretation: Yun’s own framing links the July decline squarely to the mortgage-rate spike rather than to demand destruction, and he points to the 2019-versus-today comparison as evidence of pent-up, not vanished, demand. RealtyWire’s analysis: because pending sales lead closed sales by one to two months, July’s contract-signing weakness points toward softer existing-home sales readings into the fall unless rates ease from their summer peak.
The index is benchmarked to a value of 100 in 2001, when NAR began tracking contract activity, meaning July’s reading of 71.2 remains well below that base period despite years of population and household growth since then. NAR’s release frames the “lowest since January” comparison as evidence that the modest recovery in contract signings built over the spring selling season has now fully unwound, coinciding with the mortgage-rate run-up that pushed the average 30-year fixed rate as high as 6.85% in late July, according to Redfin’s weekly tracker, before easing slightly in August. That timing lines up with the July contract weakness NAR reported Tuesday, since most buyers lock in financing before signing a purchase contract.
The pending sales report follows NAR’s existing-home sales report, which found closed sales fell 1.7% in July to 4.06 million even as prices hit a record high, and comes amid a broader run of weekly data from Redfin showing pending sales sinking to a five-month low earlier this month as mortgage rates approached their yearly high. Together, the reports paint a consistent picture of a market cooling under the weight of financing costs even as prices remain elevated.
NAR’s next existing-home sales report, covering August data, is expected in September per the association’s statistical release schedule.
