US pending home sales plunge to record low

Pending home sales in the US unexpectedly dropped in July to a record low, as elevated interest rates continued to limit affordability.

Pending sales of existing homes, which are used as indicators of upcoming sales closings, declined by 5.5% last month, the National Association of Realtors reported on Thursday.

That completely wiped out a 4.8% surge in June and will have come as a surprise to economists who had pencilled in a gain of around 0.5%.

The NAR said that all four regions of the US posted monthly losses in transactions, with the Pending Home Sales Index falling 4.1 points to 70.2 – its lowest level since the index began tracking in 2001.

"A sales recovery did not occur in midsummer," said NAR chief economist Lawrence Yun. "The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming US presidential election."

The decline in the forward-looking indicator suggests a big drop in existing home sales in August, though things could pick up before the year is out.

"Looking toward the end of this year, we expect lower mortgage rates and increases in supply to support an improvement in home sales," said Nancy Vanden Houten, lead US economist at Oxford Economics.

"However, some softening of home price growth may be needed to boost sales given the affordability challenges faced by many potential buyers."