The consensus read on the US housing market holds that affordability will eventually crack and buyers will return. July’s pending home sales record low reading in the West, and a national index now sitting at 71.2 according to the National Association of Realtors, suggests that particular thesis is ageing badly, and has been ageing badly for four consecutive years.
National pending sales fell 2.3% in July from June on a seasonally adjusted basis, landing at the second-lowest point in the NAR’s data series, which runs from July 2010. The only month to have posted a worse reading was January this year. Year-over-year, sales were down 2.2%, a comparison made against levels that were already depressed. The popular framing (that the market is pausing before a recovery) looks harder to sustain when the pause has now lasted longer than the Housing Bust trough it has undercut.
The West’s Pending Home Sales Record Low Stands Alone
The regional breakdown is where the data becomes genuinely uncomfortable for the recovery narrative. In the West, pending sales dropped 7.7% month-to-month, reaching a new all-time low in the series. The NAR’s regional index for the West now stands at 52.7, the weakest reading of any region by a wide margin. Compared with July 2021, Western pending sales have collapsed by 47.4%; against July 2019, the decline is 43.9%. Those are not rounding errors or seasonal quirks. They are structural.
The South fell 2.2% month-to-month, with its index at 85.0. Only three other months in the data have come in as low or lower, and the year-over-year comparison of minus 3.0% compounds the picture: the South’s second-lowest reading on record was posted in July 2024, meaning the region has essentially been parked at the bottom for over a year. The Northeast slipped 2.0% month-to-month to an index of 64.5, down 0.2% year-over-year. The Midwest, at 73.3, was the sole region to register a positive year-over-year comparison, up 1.7%, though that came after an 8.9% monthly plunge the prior month, so the relative flattery is limited.
Compared with July 2021 at the national level, pending sales have collapsed by 36%. Against July 2020, the drop is 41%. Even measured against July 2010, a period characterised by foreclosure-driven distress and near-zero consumer confidence, current sales are down 9%. The market is not recovering from the pandemic boom. It is now definitively worse than the worst of the post-financial-crisis period.
Rates Are Not the Whole Story
The standard explanation for the paralysis is mortgage rates. Freddie Mac‘s average weekly data shows rates ranged between 6.4% and 6.7% in July, a band they have barely left since September 2022. The consensus assigns most of the market’s dysfunction to that range.
The argument deserves scrutiny. Mortgage rates at 6%-plus were entirely ordinary for the decades before 2009. The distortion runs in the other direction: the Federal Reserve’s quantitative easing programme repressed rates to historically anomalous lows, which drove the home-price explosion from mid-2020 through mid-2022. Prices overshot what the market can absorb, and they have not corrected enough to make the monthly numbers work at current rates. The rate is not the pathology; the price level inherited from the QE era is.
Two secondary effects compound the problem. Cancellation rates on pending contracts have been running high, meaning the signed contracts that make up this index overstate eventual closed sales. And supply of existing single-family homes has climbed to a 10-year high, while condo supply has reached a 14-year high, as Wolf Street has documented. Rising supply alongside collapsing demand is not a setup that resolves in sellers’ favour.
The consensus may be overweighting rate sensitivity and underweighting the price-level problem. If that read is correct, the recovery calendar does not begin when the Fed cuts; it begins when prices adjust enough to make transactions viable again at normal mortgage rates. July’s index of 71.2, with the West at 52.7, offers no evidence that adjustment is under way.
