The National Association of Realtors said Thursday its pending home sales index inched up 0.3% to 71.2 in August, breaking a two-month slide. That modest rise beat expectations, as economists surveyed by Bloomberg had penciled in a 0.1% decline.
"Buyers steadily entered into contracts in August even though mortgage rates increased," NAR Chief Economist Lawrence Yun said. "However, the housing market is still sluggish, with contract signings below last year." The backdrop: some shoppers who had been waiting for cheaper financing appear to have moved ahead anyway, hinting at lingering pent-up demand. Even so, there is scant proof the broader market is gaining momentum.
Following the onset of the war with Iran, mortgage rates have largely climbed, reaching nearly 7% in the week ending Sept. 11, according to Mortgage Bankers Association data. They may have more room to rise. Home loan costs tend to move with the 10-year Treasury yield, which earlier this week reached its loftiest mark in nearly 20 years.
Pending contracts typically precede closings by a month or two and have long served as a guide to future existing-home sales. Regionally, the South, the country's largest home-selling market, posted a 2.3% gain, the West also saw an increase, while the Midwest and Northeast declined.
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Separate federal figures released Thursday showed housing starts dropped last month to one of the slowest clips since the pandemic, driven by a steep pullback in multifamily building. Taken together, a small rise in pending sales, pricier mortgages, and softer ground-up construction point to a market that is still tight and tentative. If you are watching affordability or planning a move, these trends can influence inventory, pricing power, and how fast listings turn over in your zip code.
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