T
he number of pending home sales in July dropped to an all-time low in 23 years, according to a report from the National Association of Realtors (NAR). The trade group's index for this metric was a meager 70.2, which is the lowest since its debut in 2001. This decline was evident as pending transactions decreased by 8.5% compared to the same period last year. The Northeast was the only region to show an increase in annual transactions.

    Despite positive job growth and an increase in the inventory of homes for sale, NAR's chief economist, Lawrence Yun, stated that these factors were not enough to overcome persistent affordability challenges. One such challenge is the high cost of homes, as highlighted in NAR's recent report on existing home sales. In July, the median sale price of these homes rose by 4.2% year-over-year to $422,600, marking the 13th consecutive month of annual increases. All four regions in the U.S. saw prices increase.

    Yun remains hopeful about the future, as he believes that falling mortgage rates will attract more buyers into the market. This week, mortgage rates dropped to their lowest level in 14 months, and they could further decrease if the Federal Reserve cuts the federal funds rate, as Fed chair Jerome Powell recently hinted at this possibility for September.

    There's also an increase in for-sale inventory at the end of July, which stood at 1.33 million homes, a nearly 20% year-over-year increase. Yun and NerdWallet mortgage expert Kate Wood have suggested that potential buyers and sellers might be adopting a wait-and-see approach as the 2024 presidential election draws near. However, several housing economists have told The Real Deal that they have found no empirical evidence to suggest that election years have any significant impact on the housing market.