The U.S. housing market continues to cool down! In July, signed contracts for existing home sales dropped to the lowest level of the year, as high home prices and elevated interest rates continue to suppress demand.

The U.S. real estate market continues to be suppressed by high home prices and high mortgage rates. Data released by the National Association of Realtors (NAR) on Tuesday shows that pending home sales in July further declined, reaching the lowest level since January this year and nearing historical lows on record, indicating that demand in the residential market remains weak. The data indicates that the U.S. pending home sales index for July fell by 2.3% month-on-month to 71.2, which is not only lower than the markets earlier expectation of stabilization but also marks the lowest level since January of this year. Since records began in 2001, this reading ties for the second-lowest in history. Seasonally unadjusted data show that the volume of contracts signed in July decreased by 2.5% compared to the same period last year. NAR Chief Economist Lawrence Yun stated that the highest mortgage rates of the year coincided exactly with the peak of the summer home-buying season, directly impacting the signing of purchase contracts. Meanwhile, home prices in the U.S. remain at historically high levels, leading to longer time on the market for listed homes, and the number of buyers willing to bid above the asking price is also lower than it was a year ago, though there are still significant regional differences. Currently, the average rate for a 30-year fixed mortgage in the U.S. is still slightly below the one-year high reached at the end of July. High rates, on one hand, have discouraged many homeowners who locked in low-rate mortgages during the pandemic from selling their existing homes, while on the other hand, have significantly increased the cost of home purchases for potential buyers, continuing to pressure housing affordability. Pending home sales generally reflect homes under contract but not yet formally completed, thus leading final sales data by one to two months, and are seen as an important indicator of future trends in existing home sales. The significant decline in Julys data suggests that U.S. existing home sales may continue to face pressure in the coming months. Regionally, all four major U.S. regions saw a decline in housing demand in July. Among them, the South, which is the largest residential sales market in the U.S., saw the index for incomplete sales fall by 2.2%, reaching the lowest level since January 2025; the Western region experienced an even more significant decrease, falling 4.7% month-on-month. The latest data also echoes the weak performance of the U.S. housing construction market. Another report released by the government on Tuesday indicated a significant decline in new housing starts in July, with single-family home construction dropping to the lowest level since 2022. Overall, under the dual pressure of mortgage rates nearing one-year highs and home prices maintaining record levels, the U.S. real estate market still lacks clear recovery momentum. Both home-buying demand and housing construction activities show signs of weakness, indicating that high financing costs remain the main limiting factor facing the current housing market.