U.S. Home Sales Drop to Record Low in July

WASHINGTON (Reuters) – Contracts to buy U.S. previously owned homes dropped to a record low in July as higher prices and borrowing costs drove potential buyers from the market.

The National Association of Realtors (NAR) reported on Thursday that its Pending Home Sales Index, based on signed contracts, fell 5.5% last month to 70.2, marking the lowest reading since the series began in 2001. Pending home sales declined across all four regions last month. Economists polled by Reuters had predicted a 0.4% increase in contracts, which typically convert to sales after one or two months.

In July, pending home sales experienced an 8.5% decline year-on-year.

Lawrence Yun, the NAR’s chief economist, noted, “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 U.S. presidential election.”

Sales activity is expected to remain low. A Conference Board survey indicated that in August, only a small percentage of consumers planned to buy a house over the next six months, the lowest since early 2013.

Although house prices are still high, the rate of increase has slowed. The Federal Housing Finance Agency reported that house prices saw a 5.1% year-on-year rise in June, the smallest increase in nearly a year, following a 5.9% rise in May.