Important points
Pending home sales rose 0.6% in August, rebounding slightly from the record low set in July. Forecasters had expected a 1% increase as lower mortgage rates in recent months improved affordability.
Despite recent declines in mortgage rates, homeownership remains out of reach for many buyers, who sit on the sidelines waiting for prices and mortgage rates to improve.
Pending home sales rebounded from record lows in August, but the recovery was more of a deflation than modest recovery forecasters had expected.
The National Association of Realtors said Thursday that pending home sales, which are forward-looking statements based on executed purchase contracts, increased 0.6% in August from July. The gains still keep the index close to its record low reached in July, according to a survey of economists by Dow Jones Communications and the Wall Street Journal, which was higher than forecasters expected1. % increase rate.
The weak sales highlight how soaring prices and mortgage rates are hurting the housing market. Monthly mortgage payments for typical homes are out of reach for buyers with typical incomes, according to the association and the Federal Reserve Bank of Atlanta’s Housing Affordability Initiative.
Mortgage rates have fallen recently as the Federal Reserve has moved to reduce borrowing costs, but they are still far higher than the ultra-low rates available during the pandemic. Average mortgage rates fell to 6.09% last week, below the recent peak of 7.79% last October but well above the 2021 low of 2.65%. The decline wasn’t enough to bring high-priced buyers back into the market. Lower mortgage rates are encouraging more owners to put their homes on the market, but inventory remains below pre-pandemic levels.
“Despite increased purchasing power and more options for selling a home, buyers are being cautious,” said Hannah Jones, economic research analyst at Realtor.com. They are probably waiting for the price to decline,” he said in a research note.
