Fewer buyers went under contract on a home last month as affordability pressures and limited inventory continue to keep many would-be buyers on the sidelines, even as some market conditions have begun to improve.
The National Association of REALTORS®’ Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—fell 5.4% in June compared to May, but contracts were down just 0.3% compared to a year ago, the association reported Thursday.
The latest report highlights an uneven housing market taking root this summer. Pending home sales as well as closed existing-home sales both weakened in June, following a five-month high for existing-home sales in May. The data suggests buyers remain cautious, despite some signs of improvement.
Housing Pressures
Economists continue to point to affordability challenges and limited inventory as the biggest obstacles facing potential home buyers.
NAR recently reported that the median existing-home sales price reached a record $440,600 in June.
“Elevated mortgage rates and the record-high national median home price together are contributing to a tepid housing market that is especially difficult for first-time home buyers,” says Lawrence Yun, NAR’s chief economist. Prior to 2008, first-time home buyers consistently accounted for about 40% of home sales; in June, they comprised 33% of existing-home sales.
Some Signs of Improvement
Compared with a year ago, however, the market continues to make gradual progress. Closed sales for existing-homes were about 3% higher than June 2025, despite slipping 2.4% from May, NAR’s data shows.
The latest decline in June’s pending home sales doesn’t necessarily signal a housing market losing momentum. As Yun points out, pending contracts don’t perfectly predict future closings. “It is closing activity, not contract signings, that generate economic impact,” Yun notes. “Pending contracts are only suggestive of upcoming closed deals and do not align perfectly, due to fallout rates and contract contingencies.”
A strengthening labor market could provide support to the housing market. Yun notes more than a half million jobs have been added since the beginning of the year, which could give more households the financial stability to consider buying.
Also, NAR recently reported improvement in its Housing Affordability Index, with mortgage rates lower than a year ago—averaging in the 6.5% range—and wage growth now outpacing home-price growth.
Nevertheless, many homeowners appear to be staying in place, and low housing inventories continue to hamper a housing recovery. Although the number of homes for sale has edged higher from a year ago, inventories were up by just 1.3% in June compared to a year ago, with supply limiting many markets in making a meaningful improvement to affordability.
“Without consistent gains in inventory, home prices can accelerate,” Yun said recently in reporting on the latest existing-home sales numbers. “It is critical to introduce more supply to the market to widen the opportunity for homeownership.”
Regional Outlook
All four major U.S. regions posted declines in pending home sales last month. Here’s a closer look at how pending home sales fared in June across the country:
- Northeast: Contract signings dropped 3% in June compared to May but were up 2.2% from a year ago.
- Midwest: Pending home sales fell 8.9% in June compared to May but were 0.3% higher than a year ago.
- South: Contract signings dropped 4.1% month-over-month and were 0.9% lower than a year ago.
- West: Pending home sales fell 4.7% in June compared to May and were 1.1% lower than a year ago.
