Pending Home Sales Show Modest Growth, But the Outlook Remains Flat

The latest Pending Home Sales Index (PHSI) report from the National Association of Realtors (NAR) shows a 4.0% increase in pending home sales for August, which is the highest level since March 2025. While this increase appears positive at first glance, it reflects a stagnant housing market that has been characterized by modest fluctuations over the past two years. The market has struggled to break free from this pattern, indicating that factors other than mortgage rates are at play.

Despite the month-over-month increase, the housing market remains slow and constrained by affordability issues, particularly for first-time homebuyers. High mortgage rates continue to dampen buyer enthusiasm, and the market has not shown significant movement, staying within a narrow range of pending sales.

Regionally, the Midwest stands out with a notable 8.7% increase in pending sales month-over-month and a 6.7% year-over-year increase. The South also saw gains, with a 3.1% month-over-month and 4.2% year-over-year increase. The West, while showing a 5.0% increase in pending sales from July, still faces challenges and only posted a modest 0.2% increase compared to last year. The Northeast saw a slight dip of 1.1%, but still showed a 2.6% increase from the previous year.

The broader housing market remains stable, with limited movement and ongoing challenges like high mortgage rates, rising home prices, and stagnant wage growth. These factors contribute to affordability issues that continue to weigh heavily on the market. While the Midwest is showing stronger performance, other regions, particularly the West, are still struggling to regain momentum.

Looking forward, the market is expected to stay in its current state unless there are significant changes to the broader economic environment, such as a significant drop in mortgage rates or improvements in affordability. The market will likely remain in a holding pattern for the foreseeable future, with many buyers waiting for clearer signals before making a move.

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