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June Pending Home Sales Fall More Than Expected Amid High Mortgage Rates, Prices

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June Pending Home Sales Fall More Than Expected Amid High Mortgage Rates, Prices

US pending home sales decreased more than projected in June amid high mortgage rates and prices, data from the National Association of Realtors showed Thursday.

The forward-looking indicator of home sales based on contract signings dropped 5.4% sequentially last month, the NAR said. The consensus was for a 0.5% decline in a survey compiled by Bloomberg. All four major US regions logged decreases in sales, NAR data showed.

"The highest mortgage rates in nearly a year and the record-high national median home price together are contributing to a tepid housing market that is especially difficult for first-time homebuyers," NAR Chief Economist Lawrence Yun said. "However, job gains can help support housing demand."

Last week, the NAR said, citing Freddie Mac data, that the average 30-year fixed-rate mortgage increased to 6.49% in June from 6.44% the month prior.

"It is worth emphasizing that it is closing activity, not contract signings, that generates economic impact," Yun said Thursday. "Pending contracts are only suggestive of upcoming closed deals and do not align perfectly, due to fallout rates and contract contingencies."

Separately, the National Association of Home Builders and Wells Fargo said Thursday that homebuilder confidence in the US deteriorated in July amid growing material prices, high land costs and elevated mortgage rates.

The housing market index, which covers new single-family homes, dropped two points sequentially to 34 this month, below Wall Street's 35 view.

"Many potential buyers remain on the sidelines as they wait for lower mortgage rates, more certainty on inflation and a clearer economic outlook," NAHB Chairman Bill Owens said. "The recently enacted 21st Century ROAD to Housing Act contains important provisions on land-use and zoning, regulatory reform and financing tools that address obstacles facing builders and buyers, but these reforms will take time to implement."

The legislation is aimed at easing the national housing crisis by boosting supply and expanding affordable homeownership, among other measures.

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