According to the National Association of Realtors (NAR), pending home sales decreased by 0.4% in July 2025 from the prior month, yet rose 0.7% year-over-year. The report provides data on the level of home sales under contract.
“Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant,” said NAR Chief Economist Lawrence Yun. “Buying a home is often the most expensive purchase people will make in their lives. This means that going under contract is not a decision home buyers make quickly. Instead, people take their time to ensure the timing and home are right for them.”
Regionally, pending sales declined month-over-month in the Northeast and Midwest, while holding essentially flat in the South, and rising in the West. Year-over-year, sales decreased in the Northeast and West, but increased in the Midwest and South.
“Pending home sales remained rather subdued in July, as the housing market continues to grind through summer,” said Realtor.com Senior Economist Jake Krimmel. “July pending sales, or contract signings, fell 0.4% since last month, while rising a modest 0.7% year-over-year. The slight bounce back in year-on-year sales represents some much-needed mean reversion after an extremely sluggish June, when pending sales dropped 2.8%. Regionally, the West led the way with a 3.7% increase month-over-month in contract signings, but a decline of 1.9% year-over-year. Contract signings fell month-over-month in the Midwest 4.0%, yet were up 1.3% year-over-year. In the Northeast U.S., there was a 0.6% decrease month-over-month in contract signings, and a 0.6% decrease year-over-year. The South reported just a 0.1% decrease month-over-month in pending home sales, yet a 1.8% increase year-over-year.
“After being decidedly a seller’s market for years, the housing market is shifting,” noted Bright MLS Chief Economist Dr. Lisa Sturtevant. “But it is too early to call the market a buyer’s market. Instead, we are in a ‘stuck’ market, which is likely where we will stay as we head into fall. Sellers are feeling stuck because they are not getting the offers they want. Bright MLS’s recent analysis found that a key reason sellers are delisting their home is because their price expectations are not being met. Buyers are feeling stuck because, although there is more inventory, home prices are still high, and affordability is still a hurdle.”
July’s Realtors Confidence Index survey shows that 16% of NAR members expect an increase in buyer traffic over the next three months, a number unchanged year-over-year. Meanwhile, 21% expect an increase in seller traffic, up from 17% reported in July 2024.
“Rising mortgage applications for home purchase are an early indicator of more serious buyers in the marketplace, though many have not yet committed to a pending contract,” added Yun. “The Federal Reserve signaling that they may enact a lower interest rate policy should steadily enlarge the pool of eligible home buyers in the upcoming months.”
At a recent economic symposium sponsored by the Federal Reserve Bank of Kansas City titled, Federal Reserve Chair Jerome Powell suggested that an unsteady labor market could benefit from lower rates.
“Putting the pieces together, what are the implications for monetary policy? In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation,” said Powell during an address at the Jackson Hole, Wyoming symposium. “When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate. Our policy rate is now 100 basis points closer to neutral than it was a year ago, and the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
The next Federal Open Market Committee (FOMC) meeting where the Federal Reserve’s Board of Governors can vote on a rate change is scheduled for September 16-September 17.
Mortgage rates continue to tick downward, falling to a 10-month low this week, as Freddie Mac reported that the 30-year fixed-rate mortgage (FRM) averaged 6.56% as of August 28, 2025, down from last week when it averaged 6.58%. A year ago at this time, the 30-year FRM averaged 6.35%.
“Looking forward, pending home sales tend to lead existing home sales by roughly one-to-two months and are a good indicator of market conditions,” said Krimmel. “Existing home sales bounced back slightly in July, but could well revert to trend soon. New home sales fell 8.2% year over year, even as the new-construction premium has dipped to historic lows. In anticipation of a Fed rate cut in September, recent drops in mortgage interest rates to 10-month lows may be enough to pull some buyers off the sidelines, with all eyes on a potential rebound in mortgage applications.”
Click here for more on NAR’s July pending home sales report.
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