US Home Contract Signings Fall 4.7% Year over Year
August pending home sales missed forecasts as mortgage rates remained elevated. Year-over-year contract activity dropped 4.7%, exceeding the 3.9% decline expected by economists.
US home contract signings fell 4.7% in August compared to the same month last year. This decline exceeded the 3.9% year-over-year drop predicted by Bloomberg-surveyed economists. The data highlights the sensitivity of buyers to rising borrowing costs.
Pending home sales rose 0.3% from July to August. This monthly increase offers limited comfort against the broader annual trend. The market remains sluggish with contract activity below prior year levels.
Mortgage Rates Suppress Buyer Activity
Mortgage rates ended August near 6.7%. Rates climbed during the summer following higher bond yields and oil prices. Concerns over the US national debt and geopolitical tensions drove these increases.
Lawrence Yun, chief economist at the National Association of Realtors, noted that buyers continued signing contracts despite rate hikes. He stated that higher rates offset buying power gains from job growth and income increases. This dynamic keeps the market from accelerating.
Regional Trends Show Mixed Results
Contract activity declined year over year in all regions of the country. Signings rose month over month in the South and the West. These regional gains did not prevent the national annual decline.
Market Remains Below Pre-Pandemic Norms
Contract signings are down approximately 30% from typical pre-pandemic levels. This metric serves as an early indicator for future closed sales. Most observers expect muted sales activity for the remainder of the year.
Expectations remain low as mortgage rates appear stuck above 7%. The combination of high rates and elevated prices continues to slow transactions. Data from GN auto markets/housing confirms the persistent drag on the sector.
