Pending home sales decline sharply due to economic uncertainty

Fewer contracts signed suggest that home sales in August and September will also be down.

Economic uncertainty is slowing potential demand, said Lawrence Yun, chief economist of the National Association of Realtors.

Bond yields are falling and the Treasury yield curve – a historical recession indicator – is flashing. In addition, the trade war between the United States and China is still unresolved and the Federal Reserve lowers its rates, which adds that things are not going so well.

Mortgage rates are at their lowest for several years – 3.94% on a 30-year average fixed rate loan of $ 484,350, according to the Mortgage Banking Association. Mortgage rates for larger loans are 3.89%.

Bond yields have fallen steadily in recent times. On Wednesday, the yield on 30-year Treasury bonds, against which mortgages are indexed, fell to its lowest level ever, at less than 2%.

But that did not inspire a run on the housing market – for now.

Mortgages are just one piece of the puzzle, Yun said. "What we desperately need is an increased supply of moderately priced homes."

A boost in housing construction could ease such a shortage while improving economic growth. But tariffs on building materials and the shortage of construction workers in a tight labor market and rising wages weigh on the sector.

The housing market is not the only gloomy indicator. Foreign investors in commercial buildings, such as offices and commercial space, sold more than they had bought for the first time in seven years in the first half of this year, according to a report by Real Capital Analytics . Although investor acquisitions totaled $ 21.3 billion, sales reached $ 21.4 billion, making them net sellers.