The National Association of Realtors recently released a report showing that pending home sales have reached their lowest level on record, despite a decline in mortgage rates. The report indicates that the number of pending home sales dropped 5.5% in July and was down 8.5% compared to the previous year, reaching the lowest level since the index was established in 2001.
One of the key factors contributing to this decline is the persistent shortage of housing supply and high home prices, which have deterred potential buyers from entering the market. Additionally, the median mortgage rates, while lower than before, are still above 6%, making it less attractive for homeowners to sell their properties and lose out on their current mortgage rates.
Many potential buyers are adopting a "wait and see" approach, anticipating further declines in mortgage rates later in the year. These expectations are fueled by slowing inflation and an uncertain economic outlook, with the Federal Reserve hinting at a potential cut to its benchmark interest rate.
However, despite the anticipation of lower mortgage rates, uncertainty surrounding housing policy as a result of the upcoming U.S. presidential election in November is also influencing buyer behavior. The report suggests that while a decline in mortgage rates may attract more buyers to the market, it could also lead to upward pressure on home prices.
Overall, the housing market is currently characterized by a sense of caution and uncertainty among buyers, who are waiting for favorable conditions before making a move. The future trajectory of mortgage rates, economic conditions, and housing policies will likely play a significant role in shaping the market in the coming months.