US Pending Home Sales Drop 5.4% in June on Mortgage Rate Surge

The National Association of Realtors (NAR) reported on the 16th local time that US pending home sales for June declined 5.4% month-over-month and 0.3% year-over-year, significantly underperforming market expectations of a 0.5% monthly decline. The drop was attributed to mortgage rates reaching nearly a 1-year high combined with national median home prices hitting record levels. NAR Chief Economist Lawrence Yun noted the combination of these factors is contributing to housing market contraction, particularly challenging for first-time homebuyers, though job growth may help support housing demand.

June Pending Home Sales Miss Market Expectations by Wide Margin

The June pending home sales figure of -5.4% month-over-month substantially missed the Yonhap Infomax market consensus forecast of -0.5%. On a year-over-year basis, pending sales decreased 0.3%. The pending home sales index serves as a leading indicator for the housing sector, tracking signed contracts that have not yet closed. Housing transactions typically complete 1-2 months after contract signing.

All Four Major US Regions Report Monthly Declines

Regional data showed declines across all four major US areas in June. The Midwest recorded the steepest drop at -8.9% month-over-month, followed by the West at -4.7%, the South at -4.1%, and the Northeast at -3.0%. Year-over-year comparisons showed the Northeast up 2.2% and the Midwest up 0.3%, while the South declined 0.9% and the West fell 1.1%.

NAR Economist Cites Mortgage Rates and Record Prices as Key Factors

Lawrence Yun, NAR Chief Economist, stated that "the combination of mortgage rates at nearly a 1-year high and the national median home price reaching an all-time high is contributing to housing market contraction." He emphasized this environment is "particularly difficult for first-time homebuyers." Yun added that "job growth can help support housing demand" and noted "it is worth emphasizing that it is the final closing activity, not contract signing, that has economic impact."

FAQ

What caused US pending home sales to decline in June? Pending home sales declined due to mortgage rates reaching nearly a 1-year high combined with national median home prices hitting record levels, according to NAR Chief Economist Lawrence Yun.

Which US region saw the largest decline in pending home sales in June? The Midwest region recorded the largest decline at 8.9% month-over-month in June, followed by the West at 4.7%, the South at 4.1%, and the Northeast at 3.0%.