Pending home sales drop 5.4% in June as high rates squeeze buyers

The steepest monthly drop in pending home sales this year signals the housing market's recovery is stalling under the weight of near-record mortgage rates.

Pending home sales in the U.S. fell 5.4% in June to an index reading of 72.5, the National Association of Realtors said Thursday. The decline was far steeper than the flat reading economists had forecast in a Wall Street Journal survey, marking the largest monthly drop of 2026 and snapping a seven-month streak of year-over-year gains in contract signings.

"The highest mortgage rates in nearly a year and the record-high national median home price together are contributing to a tepid housing market that is especially difficult for first-time homebuyers," said Dr. Lawrence Yun, chief economist at NAR. "However, job gains can help support housing demand."

Contract signings fell in all four major U.S. regions. The Midwest posted the steepest decline at 8.9% month over month, followed by the West at 4.7%, the South at 4.1% and the Northeast at 3%. On a year-over-year basis, the Northeast and Midwest still managed gains of 2.2% and 0.3%, respectively, while the South fell 0.9% and the West dropped 1.1%.

The pullback reflects a convergence of affordability pressures. The median existing-home price reached approximately $441,000 in June, an all-time high, while the average 30-year fixed mortgage rate hovered near 6.5% during the month and climbed to 6.65% in the week ending July 10 — the highest since August 2025, according to the Mortgage Bankers Association. Existing-home sales slipped 1.9% month over month to a seasonally adjusted annual rate of 4.09 million in June, though they remained 2.8% higher than a year earlier.

Regional divergence persists despite broad weakness

Despite the national decline, several metro areas posted double-digit year-over-year gains in pending sales. Virginia Beach-Chesapeake-Norfolk led the 50 largest markets with a 15.4% increase, followed by Sacramento-Roseville-Folsom at 15.2% and Kansas City at 14.4%, according to Realtor.com Economics data. Richmond, Virginia, and Buffalo, New York, rounded out the top five with gains of 14% and 12.1%, respectively.

The divergence highlights a market where relative affordability in secondary cities continues to draw buyers priced out of larger coastal hubs. The Northeast corridor has emerged as the most resilient region, with Hartford, Connecticut, and Manchester, New Hampshire, consistently ranking among the hottest markets in Realtor.com's monthly index.

The Mortgage Bankers Association projects the 30-year fixed rate will hold in the 6.1% to 6.3% range through the remainder of 2026. Combined with still-elevated prices, that trajectory suggests the housing market will remain subdued for the rest of the year, with first-time buyers facing the steepest headwinds. NAR's Yun noted that job gains could help support demand, but the June data shows how far affordability must improve before a meaningful recovery takes hold.

This article is for informational purposes only and does not constitute investment advice.