“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August,” NAR chief economist Lawrence Yun said in the report. “However, contract signings remain near cyclical lows even as home prices keep marching to new record highs.”
Kate Wood, mortgage expert at NerdWallet, pointed out that August’s buyers were grappling with more than just high home prices and limited inventory.
“Pending home sales once again rebounded after a record low, but it wasn’t much of a bounce,” said Wood. “Potential August buyers were dealing with the same old story — high prices, low inventory — but had other reasons to hold off, too. Even though mortgage interest rates had been going down since spring, buyers may have been waiting on a rate cut from the Federal Reserve. It’s also possible that the uncertain atmosphere of the Presidential election is adding to buyers’ hesitation.”
The slow pace of the housing market has left many buyers and sellers stuck in limbo. Odeta Kushi, deputy chief economist at First American, explained that although rates fell, they didn’t fall far enough to lure back a large number of buyers.
“Challenging affordability conditions and historically low inventory persist as significant barriers for home buyers,” Kushi noted.