Pending home sales edged up 0.6 percent in August, as declining mortgage rates made home purchases more affordable, according to data released Thursday by the National Association of Realtors.
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Pending home sales edged up modestly in August, as declining mortgage rates made home purchases more affordable, according to new data released Thursday by the National Association of Realtors (NAR).
The Pending Home Sales Index (PHSI) rose 0.6 percent to 70.6 in August, though year-over-year contract signings were still down 3 percent.
NAR Chief Economist Lawrence Yun attributed the rise to declining mortgage rates, but confirmed that contract signings remain near cyclical lows.
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“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5 percent in August,” NAR Chief Economist Lawrence Yun said. “However, contract signings remain near cyclical lows even as home prices keep marching to new record highs.”
Regionally, the Midwest, South, and West saw month-over-month gains, while the Northeast experienced a decline. Year over year, the West posted growth, but the other regions saw declines.
In the Northeast, the PHSI fell 4.6 percent from last month to 61.6, a drop of 2.2 percent from the previous year.
Pending sales in the Midwest increased 3.2 percent to 70.0 in August, down 3.6 percent from 2023, while pending sales in the South slightly increased 0.1 percent to 83.6 percent in August, receding 5.3 percent from last year. Pending sales in the West also saw an increase, up 3.2 percent in August to 58.0, an increase of 2.7 percent from the previous year.
“In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months,” Yun said. “Contract signings rose in both the most affordable and most expensive regions – the Midwest and West, respectively – because mortgage rates have fallen nationally. Housing affordability will continue to see notable improvements.”
“The Federal Reserve does not directly control mortgage rates, but the anticipation of more short-term interest rate cuts has pushed long-term mortgage rates down to near 6 percent in late September,” added Yun. “On a typical $300,000 mortgage, that translates to approximately $300 per month in mortgage payment savings compared to a few months ago.”
In July, the Pending Home Sales Index (PHSI) fell across all U.S. regions, driven by concerns over housing affordability and the upcoming election. A survey conducted by Inman Intel and Dig Insights on August 27 found that a mortgage rate between 5.0% and 5.5% would encourage more renters to become buyers.
However, as of August, mortgage rates remain above this range.
Email Richelle Hammiel
