US pending sales of existing homes fell for a second month in July as potential buyers balked at still-elevated prices and borrowing costs, consistent with a sluggish housing market.
An index of contract signings slipped 0.4% last month to 71.7, around where it's lingered for much of the year, according to National Association of Realtors data released Thursday. The median estimate of economists surveyed by Bloomberg projected a 0.2% drop in July.
READ MORE:
Buyers have seen modest relief recently as rates slipped to a four-month low of 6.67% earlier in August, and have stayed close to that in recent weeks. Financing costs, however, remain double what they were at year-end 2021, a time when many homeowners refinanced their loans to take advantage of lower rates.
"Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant," NAR Chief Economist Lawrence Yun said in a statement.
Without a sustained drop in mortgage rates and more favorable asking prices, previously owned home sales will be hard-pressed to move much beyond 4 million this year — a pace they've been stuck at for the past two years.
READ MORE:
Meantime, the pace of price growth has at least moderated nationwide, rising by just 0.2% in July from a year ago. Prices have even fallen in once-hot housing markets in the West and South, where inventory has built up the most.
"Rising mortgage applications for home purchase are an early indicator of more serious buyers in the marketplace, though many have not yet committed to a pending contract," Yun said.
Contract signings in the South, the nation's biggest home-selling region, eased slightly. Pending sales also fell in the Midwest and Northeast, while climbing 3.7% in the West.
Pending-homes sales tend to be a leading indicator for previously owned homes, as houses typically go under contract a month or two before they're sold.
