Washington: Pending home sales in the US fell sharply in July, missing market expectations for a slight increase as elevated mortgage rates and record home prices continued to weigh on affordability, data showed Tuesday. According to Anadolu Agency, the National Association of Realtors (NAR) reported that its Pending Home Sales Index declined 2.3% from the previous month, falling to its lowest level since January 2026.

Markets had anticipated a modest monthly increase of 0.1%, making the decline particularly significant. Pending sales, which track signed contracts for existing homes and typically lead completed sales by one or two months, were also down 2.2% from July 2025. Contract signings decreased month-on-month across all four major US regions.

The West experienced the most significant monthly drop at 4.7%, followed by the South at 2.2%, the Northeast at 2%, and the Midwest at 0.7%. On an annual basis, pending sales fell 7.1% in the West, 3% in the South, and 0.2% in the Northeast. The Midwest was the only region to record an increase, rising 1.7%.

NAR Chief Economist Lawrence Yun commented, 'The highest mortgage rates of the year hit right in the middle of summer, and that's pulling back contract signings.' Yun also noted that record-high home prices were causing properties to remain on the market longer, with fewer buyers offering above the asking price compared to the previous year.

Pending contracts are currently 30% below their pre-pandemic level in 2019, despite US payroll employment being 5% higher, according to the association. Yun suggested that the gap indicated substantial pent-up housing demand that could emerge in the coming years if mortgage rates decline, affordability improves, and more homes become available.