(Kitco News) - Hopes for a stabilizing U.S. housing market were weakened after the number of potential home buyers came in well below expectations last month, according to the latest data from the National Association of Realtors (NAR).
The U.S. pending home sales index fell 2.3% in July, the NAR announced on Tuesday. The data was worse than forecasts, as economists expected a 0.3% rise. June’s print was revised to -4.8% from -5.4%.
For the year, pending home sales fell 2.2% in July against expectations for a 1.4% increase and following the unrevised 0.3% decrease in June. Month-over-month pending home sales declined in all regions, while year-over-year sales rose in the Midwest but declined in the Northeast, South and West.
“The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings,” said NAR Chief Economist Dr. Lawrence Yun. “Home prices are at record highs so houses for sale are sitting on the market longer, and fewer buyers are bidding above the asking price than a year ago, though there are large local market variations.”
“Job gains should bring more buyers into the market, especially if mortgage rates stabilize or decline, though that impact takes time to show up,” Yun said. “Right now, pending contracts are 30% below their pre-pandemic 2019 level, while payroll employment is 5% above. That gap points to sizable pent-up demand that should be unleashed in the coming years as more supply reaches the market and affordability improves.”
Spot gold fell to a session low of $4,376.19 at the North American open, but spiked higher in the minutes following the housing data. It last traded at $4,400.10 per ounce for a loss of 0.38% on the day.
Economists pay close attention to pending home sales because the report is a leading indicator of existing home sales, given that contracts are signed a few months before homes are actually sold.
The U.S. housing market has been trying to stabilize after seeing significant weakness over the past two years, as many potential home buyers were priced out of the market due to rising prices and high mortgage rates.
