Pending Home Sales Retreat in July as Mortgage Rates Hit 2026 High

Pending home sales continue to lag month over month and year over year, as mortgage rates reached their highest level so far this year.

Contract signings on existing homes fell 2.3% in July from the prior month, with declines in all four regions, the National Association of Realtors reported Tuesday. Zooming out further, pending sales fell 2.2% year over year, with gains in the Midwest but declines in the Northeast, South, and West.

The NAR’s Pending Home Sales Report tracks the volume of contract signings on existing homes. A sale is listed as pending when a contract has been signed, but a sale has not yet been finalized. The pending home sales rate is a leading indicator of the housing sector’s health as it helps predict the rate of home sales a month or two later.

The latest report confirms extends the decline in pending home sales registered in June, though the decline varied somewhat across regions.

In the Northeast, pending home sales fell 2% month over month and dropped slightly by 0.2% year over year. Pending home sales in the Midwest saw a 0.7% decrease from the previous month, but rose by 1.7% compared to last year. In the South, pending home sales fell 2.2% month over month and 3% year over year. In the West, pending home sales fell the most, down 4.7% from the previous month and 7.1% year over year.

Overall, pending home sales in July fell to the lowest level since January 2026. National Association of Realtors Chief Economist Lawrence Yun attributes the slip in sales to high mortgage rates, which have hovered between 6.5% and 6.7% in the last several months, and a lukewarm job market.

In response, the market saw lower listing prices. In July, median list prices fell 2.4% year over year, and price per square foot declined in 34 of the top 50 metros. However, closed sale prices continue to sit at record highs, according to NAR.

“The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings,” said 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.”

Yun is optimistic that when the job market improves, the housing market will too, though the latest employment numbers were not positive. The U.S. lost 23,000 jobs in July, and though the unemployment rate is 4.1%, that doesn’t tell the whole story. According to the U.S. Labor Department, 234,000 people quit the job market in July.

“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.”

Geopolitical realities are taking a toll on the housing market

Realtor.com senior economist Hannah Jones attributed some of the weakness in the housing market to outside geopolitical forces, including the war in Iran.

“Pending home sales eased in July as geopolitical tensions resurfaced, pushing oil prices to their highest level since May and putting upward pressure on mortgage rates and inflation,” she noted. “Rates climbed more than 20 basis points through the month, eroding some of the year-over-year affordability advantage that had quietly been supporting buyer activity all spring.”

Even so, said Jones, the picture isn’t entirely catastrophic. Jones believes, like Yun, that the report reflects more of a “seasonal slowdown rather than an outright collapse.”

“Looking ahead, the late summer market will likely continue its seasonal drift. Inventory tends to build and price cuts become more common as attention turns toward the school year, which could create real opportunity for buyers still active in the market, particularly if rates find some relief,” she said. “The key question heading into August is whether the current slowdown is seasonal or something more lasting. Last summer, price cuts accelerated, pending sales fell, and delistings picked up. So far, July’s data doesn’t show a repeat of that retreat.”

Metros with the biggest pending home sale increases in July

1. Virginia Beach-Chesapeake-Norfolk, VA-NC (+17.2%)

2. San Antonio-New Braunfels, TX (+11.8%)

3. Cincinnati, OH-KY-IN (+6.2%)

4. Pittsburgh, PA (+3.7%)

5. Miami-Fort Lauderdale-West Palm Beach, FL (+2.4%)

6. Austin-Round Rock-San Marcos, TX (+1.6%)

7. Buffalo-Cheektowaga, NY (+1.3%)

8. St. Louis, MO-IL (+1.2%)

9. Jacksonville, FL (+1.2%)

10. Columbus, OH (+0.2%)