US home sales fall to record low – Pasadena Star News

An indicator of pending existing home sales in the U.S. fell to its lowest level ever in July as high prices and borrowing costs continue to deter buyers.

A National Association of Realtors index of contract closings fell 5.5 percent to 70.2 last month, hitting its lowest level since 2001, the association said Thursday. The decline was larger than any estimate in a Bloomberg survey of economists and reflected falling sales in all four major regions.

“The positive impact of job growth and higher inventories could not overcome affordability issues and some wait-and-see sentiment related to the upcoming U.S. presidential election,” NAR chief economist Lawrence Yun said in a statement.

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The used home market has been hampered by high borrowing costs and low inventory for nearly two years. While mortgage rates fell to their lowest levels in over a year this month, high prices and low inventory are scaring off potential buyers who may be waiting for lower rates.

“Falling mortgage rates will undoubtedly bring buyers into the market,” Yun said.

The contract interest rate for a 30-year fixed-rate mortgage is now below 6.5 percent after Federal Reserve Chairman Jerome Powell said last week that “the time has come” for the central bank to cut interest rates.

Lower borrowing costs would help ease one of the least affordable housing markets in history. An index of U.S. home prices from S&P CoreLogic Case-Shiller hit a new record on Tuesday, with prices rising 5.4% in the year to June.

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Sales fell in all four U.S. regions, especially in the Midwest and South. The Northeast saw the smallest decline last month, and Yun noted that the New England region has performed better than others recently.

Pending sales numbers are typically a leading indicator of used home sales, as homes typically go under contract one to two months before they are sold.