U.S. Housing Contracts Fall to 2026 Low as Mortgage Rates Pressure Buyers

The National Association of Realtors reported that pending home sales declined 2.3% from June and 2.2% from a year earlier. Contract activity fell in all four major U.S. regions on a monthly basis, while the Midwest was the only region to record year-over-year growth.

Pending sales are closely watched by real-estate professionals because they measure signed contracts that have not yet closed. The indicator can therefore provide an early view of future existing-home sales.

Contract Activity Reaches Its Lowest Point of the Year

The July decline brought pending home sales to their lowest level since January.

The NAR data showed that the slowdown was broad rather than confined to a single region. Northeast pending sales fell 2.0% month over month, while the South and West also recorded declines. The Midwest performed better on a year-over-year basis but still experienced a monthly decline.

The breadth of the decline is important for agents and property professionals because it indicates that higher financing costs are affecting buyers across multiple markets.

Mortgage Rates Remain a Central Factor

Mortgage rates reached their highest level of the year during the period covered by the report, according to NAR and Realtor.com.

The higher cost of borrowing has increased the monthly expense associated with purchasing a home, making affordability more difficult for households already facing elevated prices.

NAR Chief Economist Lawrence Yun said the higher rates were pulling back contract signings while record-high home prices were contributing to longer marketing periods for some properties.

The combination is particularly significant because buyers generally have to balance both the purchase price and financing cost when determining affordability.

Housing Construction Is Also Under Pressure

The pending-sales figures arrived alongside separate government data showing a sharp decline in new residential construction.

The Census Bureau reported that housing starts fell 12.4% in July to an annualized 1.239 million units. Single-family starts declined 9.9%, while total housing completions fell 9.1%.

Building permits, however, increased 5% from June, suggesting that some builders continued preparing for future construction despite the slowdown in actual starts.

The mixed construction data indicate that developers and builders have not abandoned future projects, but current conditions are limiting the pace at which projects move into construction.

Regional Differences Remain Important

Although the national market weakened, some metropolitan areas continued to show stronger contract activity.

NAR data reported year-over-year increases in several markets, including Virginia Beach, San Antonio, Cincinnati, Pittsburgh and the Miami-Fort Lauderdale-West Palm Beach metropolitan area. Miami's pending sales were up 2.4% from a year earlier.

The variation reinforces the importance of local conditions.

Housing markets can respond differently depending on inventory, employment, population growth, income levels and the balance between local home prices and wages. A national decline therefore does not necessarily describe conditions in every metropolitan area.

Implications for Real-Estate Professionals

For agents, brokers and other real-estate professionals, slower pending sales can mean longer transaction timelines and more cautious buyers.

NAR said pending contracts were about 30% below their pre-pandemic 2019 level, while payroll employment was 5% above that level. The comparison suggests that employment has remained relatively stronger than transaction activity, while affordability constraints continue to prevent some households from entering the market.

The latest report also shows why pending sales are an important industry indicator. Because contracts are signed before transactions close, a sustained decline can signal weaker closed-sale activity in the following months.

For the housing industry, the immediate challenge remains affordability. Mortgage rates and home prices are limiting demand even as builders continue to seek permits and some markets show pockets of resilience.

The July figures therefore provide another indication that the U.S. housing market remains in a slower, more selective phase. The direction of mortgage rates, construction activity and buyer demand will determine whether the slowdown remains temporary or becomes a more persistent feature of the market.