Home contract signings improved slightly from July to August but slumped from a year ago, a sign of buyers' sensitivity to higher mortgage rates.
Pending home sales, a measure of homes going under contract, climbed 0.3% in August from a month earlier but are down 4.7% from last year, according to National Association of Realtors data. Economists surveyed by Bloomberg expected a more modest 3.9% year-over-year drop.
"Buyers steadily entered into contracts in August even though mortgage rates increased," Lawrence Yun, the NAR's chief economist, said in a statement. "However, the housing market is still sluggish, with contract signings below last year. This is due to higher mortgage rates offsetting the increased buying power created by job gains and income growth outpacing home price growth."
Read more: When will mortgage rates go down again?
Mortgage rates rose over the summer, following bond yields and oil prices higher amid ongoing concerns about the US national debt and the Iran War. They ended August around 6.7%.
Contract activity declined year over year in all parts of the country, while signings rose in August in the South and the West.
The combination of high mortgage rates and elevated prices has slowed home buying and selling to a crawl. Contract signings, which typically occur a month or two before a home is sold, are down around 30% from typical pre-pandemic levels, Yun said.
Because homes go under contract before they're recorded as sold, pending home sales can be an early indicator of future sales activity. Most housing market watchers have muted expectations for sales the rest of this year as mortgage rates appear stuck above 7%.
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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