July US Pending Home Sales Fell Four Times the Expectation

Contracts to purchase previously owned US homes slipped 0.4% in July, according to Reuters—four times the -0.1% decline forecast by economists. The miss highlights the continued fragility in housing demand, even as affordability is expected to be improving from its worst levels. Adding to the concern, the cancellation rate for signed deals has now hit a record high.

The National Association of Realtors’ Pending Home Sales Index edged down to 71.7 from 72.0 in June. Despite this, July still posted a modest 0.7% year-on-year gain. However, momentum has clearly weakened, following June’s 0.8% monthly drop. Regionally, the West led with a 3.7% rise, while the Midwest fell 4.0%, the Northeast slipped 0.6%, and the South dipped 0.1%.

The NAR index reflects signed contracts and serves as a forward-looking indicator for closings one to two months ahead. Elevated mortgage rates and a cooling labour market—both factors that former President Trump has publicly commented on—continue to weigh on buyer sentiment.

According to InvestingLive, Redfin recently reported that around 15% of signed contracts were cancelled, marking an all-time high and signalling growing buyer hesitation even after offers are accepted.

As pending sales typically lead to existing-home closings, July’s surprise 0.4% drop does set a softer benchmark for late-Q3 housing prints. Until mortgage costs fall and inventory improves further, contract signings are likely to remain choppy.