Pending Home Sales Declined 2% in August

Washington, DC, September 28, 2022-The Pending Home Sales Index fell 2.0% to 88.4 in August,” according to the National Association of Realtors. Year-over-year, pending transactions dwindled by 24.2%. An index of 100 is equal to the level of contract activity in 2001.

"The direction of mortgage rates – upward or downward – is the prime mover for home buying, and decade-high rates have deeply cut into contract signings," said NAR chief economist Lawrence Yun. "If mortgage rates moderate and the economy continues adding jobs, then home buying should also stabilize."

Yun expects the economy will remain sluggish throughout the remainder of this year, with mortgage rates rising to close to 7% in the coming months.

"Only when inflation calms down will we see mortgage rates begin to steady," said Yun.

As a result of the current interest rate environment and weaker economic activity, NAR expects existing-home sales to decline 15.2% in 2022, to 5.19 million units, while new home sales are projected to fall by 20.9%.

Yun notes that limited housing inventory and almost non-existent distressed property sales have supported home prices. Overall, he forecasts prices will rise by 9.6% in 2022.