Pending sales dip for seventh time this year

U.S. pending home sales fell in August for the seventh time this year, extending the housing market’s downturn as high borrowing costs sideline prospective buyers.

The National Association of Realtors’ index of contract signings to purchase previously owned homes decreased 2% last month to 88.4 — the lowest since 2011, excluding the immediate aftermath of the pandemic — according to data released Wednesday. The median estimate in a Bloomberg survey of economists called for a 1.5% drop.

The housing market has been unraveling as the Federal Reserve continues its aggressive path of interest rate hikes to combat inflation, pushing mortgage rates up to the highest since 2008. That has weighed on demand as well as builder sentiment, pointing to muted new construction activity to come.

A report earlier Wednesday showed a measure of mortgage applications fell last week to the lowest level since 1999. Separate data Tuesday showed a national measure of prices in 20 large cities fell in July, the first drop since March 2012.

“The direction of mortgage rates — upward or downward — is the prime mover for homebuying, and decade-high rates have deeply cut into contract signings,” Lawrence Yun, NAR’S chief economist, said in a statement. “Only when inflation calms down will we see mortgage rates begin to steady.”

Contract signings decreased in three of four regions and the West posted a small increase, similar to July’s data.

Compared with a year earlier, contract signings were down 22.5% on an unadjusted basis.

Pending home sales are often looked to as a leading indicator of existinghome purchases given properties typically go under contract a month or two before they’re sold. Sales of previously owned homes, calculated when a contract closes, fell for the seventh straight month in August.

Mortgage payments soar in 10 metros

Mortgage rates in the United States have soared alongside Federal Reserve rate hikes. The average 30year mortgage now stands above 6.7%, the highest since 2007.

And although there are signs that the market value of homes is weakening, the absolute levels remain extremely high. As such, the cost of a monthly payment has surged.

Of course, a key question now whether today’s prices can be sustained given the affordability shock shown below.

Here are 10 metro areas that have soared the most: Austin, Texas Boise, Idaho Akron, Ohio Miami

New York/nj/long Island

Los Angeles Washington, D.c./arlington/alexandria Silicon Valley Tucson

El Paso, Texas

ROGELIO V. SOLIS — THE ASSOCIATED PRESS A real estate sign decorates the lawn of a new house in Pearl, Miss., on Sept. 23, 2021. Homeowner equity climbed to record highs in the first half of 2022, though its rate of growth is slowing as the housing market cools.