T
he real estate market is experiencing a decline in pending sales, with a drop of 6.9% in the last four weeks, according to Redfin. This represents the biggest annual decline in almost a year. Despite the decrease in mortgage rates, homebuyers are hesitant to re-enter the market due to several factors.

    One of the primary reasons is the introduction of new rules by the National Association of Realtors (NAR) that have changed the way real estate agents are paid. These rules aim to make agent fees more transparent, but may also make homebuyers more cautious as they weigh upfront costs. Some buyers have been misinformed about the rule, which requires them to sign a buyer-representation agreement before viewing any homes with an agent.

    Another factor deterring homebuyers is the uncertainty surrounding future mortgage rates and home prices. While a Federal Reserve interest rate cut is expected in September, borrowing costs could soon decrease on everything from mortgages to auto loans to credit cards. Investors are pricing in a 25 basis point rate cut at next month's Federal Open Market Committee meeting, according to the CME FedWatch tool.

    Moreover, home sale prices hit a record high of $442,389 in June, dropping slightly to $439,170 in July. Buyers may be waiting to see if these nearly record-high home costs will fall further. However, a rate cut could potentially boost housing demand in the short term, leading to an increase in home prices.

    Lastly, political uncertainty is also a factor delaying homebuyers. Prospective buyers believe that the outcome of the November election could influence the real estate market. Many of them are waiting on the sidelines until November, hoping to get a lower rate and more homes to choose from.

    In conclusion, while mortgage rates are falling, homebuyers are hesitant to re-enter the market due to a combination of factors. These include new NAR rules, uncertainty about future mortgage rates and home prices, and political uncertainty.