The numbers: U.S. pending-home sales fell in July by 1% , according to the monthly index released Wednesday by the National Association of Realtors.
Analysts polled by the Wall Street Journal had forecast the pending home sales index to drop by 3%.
Sales dropped for the second month in a row in July. In June, pending home sales fell by 8.6%. This is also the eighth time pending home sales have fallen in the last nine months.
The index reflects transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed.
Economists view it as an indicator for the direction of existing-home sales in subsequent months.
The drop in pending home sales follows weaker data on the new home and existing home sales fronts, as well as a dip in mortgage application activity.
Key details: Compared with a year earlier, transactions were down 19.9%.
Pending sales fell in three of the four major regions, but activity increased in the West slightly.
Big picture: Housing market activity has stalled since the Federal Reserve raised interest rates.
Sellers are finding it harder to find buyers in many markets, as potential homebuyers continue to pull back as the economic outlook remains uncertain, and mortgage rates edge higher.
More buyers are also backing out of deals, Redfin noted.
Consequently, home prices have already begun to slow, and even fall, in some parts of the country.
What the realtors said: “In terms of the current housing cycle, we may be at or close to the bottom in contract signings,” NAR Chief Economist Lawrence Yun said.
The smaller drop this month as compared to the previous likely reflects mortgage rates stabilizing, Yun added.
But housing affordability has plunged to the lowest level since 1989, the NAR noted. For a household taking out a 30-year fixed-rate mortgage with a 20% down payment, the monthly payment for a typical home has increased by 54% from a year ago to $1,944, they said.
Yun expects home price appreciation to slow to 5% by the end of this year and into 2023.
Market reaction: The Dow Jones Industrial Average
and the S&P 500
were both slightly down in early trading on Wednesday. The yield on the 10-year Treasury note
rose above 3.05% during early trading on Wednesday.