US pending home sales fall as mortgage rates rise

US pending home sales fell in June following a slight increase the month before, as mortgage rates rose, according to figures released on Wednesday by the National Association of Realtors.

Pending home sales declined by 8.6% on the month, taking the index to 91.0, while year-over-year, sales were down 20%, marking the slowest pace since September 2011.

Sales fell in all regions. The Northeast pending home sales index slid 6.7% on the month to 80.9, down 17.6% on June 2021. Meanwhile, the Midwest index fell 3.8% to 93.7 in June, a 13.4% decline from a year ago.

The index for the South was down 8.9% to 108.3, a decrease of 19.2% from the previous year, while the index for the West slumped 15.9% to 68.7, down 30.9% from the same month a year ago.

NAR chief economist Lawrence Yun said: "Contract signings to buy a home will keep tumbling down as long as mortgage rates keep climbing, as has happened this year to date. There are indications that mortgage rates may be topping or very close to a cyclical high in July. If so, pending contracts should also begin to stabilise.

"Home sales will be down by 13% in 2022, according to our latest projection. With mortgage rates expected to stabilize near 6% and steady job creation, home sales should start to rise by early 2023."

Oxford Economics said: "The decline in pending home sales in June points to another drop in existing home sales in July. Looking further ahead, if home price growth starts to moderate as we expect, we think home sales can begin to stabilise."