Two different views on the housing market released Thursday point to the same problem, and one appears to be getting worse. Homes are too expensive to own and build.
The number of pending home sales, which measures the number of existing homes under contract, fell 5.4% in June from May, according to the National Association of Realtors. Sales decreased by 0.3% from June 2025, which was significantly lower than analysts’ expectations.
This number is the most timely indicator of market conditions, as it is based on people who decided to buy and close on a home in June.
“The highest mortgage rates in nearly a year and the highest national median home price on record are contributing to a weak housing market, especially challenging for first-time homebuyers,” NAR Chief Economist Lawrence Yun said in a release.
Mortgage rates stayed within a narrow but high range in June, with the average rate on the popular 30-year fixed mortgage at exactly the same rate from 6.6% at the beginning of the month to the end, according to Mortgage News Daily. At the end of February, the day before the Iran war began, it was as low as 5.99%.
Demand for mortgages from homebuyers has weakened over the past month. Despite mortgage rates being slightly higher last year, the number of applications for mortgages to buy a home fell 2% last week compared to the same week last year.
Meanwhile, sentiment among the nation’s single-family home builders declined in July, according to a separate report released Thursday by the National Association of Home Builders. The figure has fallen to 34 from 36, which was revised upward in June. Sentiment has been below 40 for 15 consecutive months, the longest period since 2012. Anything below 50 is considered negative sentiment.
“Housing affordability remains a key challenge for the homebuilding industry as rising mortgage rates, expensive land, rising material prices, and persistent skilled labor shortages continue to impact the market,” NAHB Chief Economist Robert Dietz said in a release.
The percentage of builders who reduced prices in July was 37%, up from 35% in June and 32% in May. According to NAHB, sales incentive utilization rate was 63% in July, up slightly from 62% in June and the 16th consecutive month the rate has reached 60% or higher.
Dietz said Congress’ new housing law, which eliminates red tape and speeds up housing approvals by local governments, “will require further policy changes at the state and local level, but is a positive step toward expanding housing supply and lowering overall housing costs.”
Existing home prices continue to rise, with the median price setting a new record in June, according to NAR. Although there are some regional weaknesses, the generally low housing supply continues to put upward pressure on prices.
“At the end of the day, housing continues to be a drag on the U.S. economy, accounting for about 15-18% of the total U.S. economy, according to NAHB,” said Peter Boockvar, chief investment officer at One Point BFG Wealth.
