In July, home sales are reversed, down 2.5% despite low rates

Pending home sales fell 2.5% in July and were down 0.3% from July 2018, according to the National Association of Realtors. Pending sales are signed contracts for the purchase of existing homes. It is therefore a future indicator of closed sales in August and September.

This weaker than expected result came after two months of sales growth and could indicate how much today's borrowers are sensitive to even the slightest fluctuations in mortgage rates.

According to Mortgage News Daily, the average 30-year fixed rate fell from around 4.2% in early May to around 3.8% in early July.

This has resulted in a late increase in buyers' interest for the spring market. The rate then reversed and reached 3.95% in mid-July. It then fell back to around 3.85% at the end of the month and fell again until August.

The slight increase in July could have accounted for at least some of the decline in pending sales.

"Extremely low mortgage rates have not yet routinely brought buyers back into the market," said Lawrence Yun, chief economist of NAR. "Economic uncertainty is likely to dampen potential demand, but what we absolutely need is an increased supply of moderately priced homes."

The rise in real estate prices has been moderated for much of the spring, but early indications are that these gains are strengthening again, likely due to lower mortgage rates.

The lack of affordable housing for sale continues to be the biggest barrier to the housing market. The offer is at the lowest level, and it is there that prices rise the most. There are more securities available for sale for the high-end, but buyers are more sensitive to the latest volatility of the stock market.

"Falling mortgage rates are definitely making homebuyers come in. That's what our agents tell us," said Daryl Fairweather, chief economist at Redfin, a real estate brokerage firm. "But there is a lot of uncertainty in the economy right now. People are worried about the recession." This is emerging from consumer confidence data and could dampen an increase in consumer demand. would have been more important. "

On a regional basis, sales of dwellings in the Northeast in July decreased 1.6% for the month and were 0.9% lower than the previous year. In the Midwest, sales fell 2.5% a month and 1.2% a year. In the south, they decreased by 2.4% per month, but by 0.1% more than last July. In the West, standby sales declined 3.4% for the month but increased 0.3% annually.

Fenced sales of existing homes in July, mostly contracts signed in May and June, were up 2.5% stronger than expected for the month and were slightly higher than July 2018. This was the first annual increase for more than a year. Falling mortgage rates during this period probably helped to drive more buyers out of the market.