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Pending home sales fell in June as surging mortgage rates and record-high home prices are making home buyers more cautious in moving forward. The median existing-home price hit an all-time high in June ($416,000). Homes were 80% more expensive in June than they were in 2019, the National Association of REALTORS® reports.
Nearly a quarter of home buyers who purchased a home three years ago would be unable to qualify to buy a median-priced home at today’s elevated prices, NAR reports.
NAR’s Pending Home Sales Index—a forward-looking indicator of home sales—posted an 8.6% decline in June compared to May. Pending home sales are down 20% compared to a year ago.
Contract signings fell in all four major regions across the country last month. The West saw the largest monthly decline, with pending home sales dropping by one-third in the past year, NAR reports.
“Contract signings to buy a home will keep tumbling down as long as mortgage rates keep climbing, as has happened this year to date,” says Lawrence Yun, NAR’s chief economist. “There are indications that mortgage rates may be topping or very close to a cyclical high in July. If so, pending contracts should also begin to stabilize.”
Still, NAR has updated its forecast and is now predicting home sales to fall by 13% in 2022. “With mortgage rates expected to stabilize near 6% and steady job creation, home sales should start to rise by early 2023,” Yun says.
