Dateline: WASHINGTON, July 30, 2025 – US pending home sales fell 0.8% in June, exceeding economist expectations as higher mortgage rates weighed on housing demand.
The decline signals continued pressure on the residential real estate sector, with contract cancellations also hitting record levels for the month.
- Pending home sales dropped 0.8% versus 1.8% expected gain
- Contract cancellation rate reached record 14.9% in June
- Higher mortgage rates continue pressuring housing market activity
Market Impact and Context
The National Association of Realtors (NAR) reported the pending home sales index, a leading indicator based on signed contracts, fell 0.8% month-over-month in June 1. Economists polled had expected a 1.8% increase, making the decline a significant miss 2.
The disappointing data follows NAR’s earlier report showing existing home sales dropped 2.7% in June to a seasonally adjusted annual rate of 3.93 million 6. This dual decline underscores mounting headwinds facing the housing sector as borrowing costs remain elevated.
Record Cancellation Rates Signal Buyer Hesitation
Adding to market concerns, 14.9% of pending home sales fell through in June, up from 13.9% a year earlier and marking the highest June cancellation rate on record since tracking began in 2017 8. The cancellation rate translates to roughly one in seven deals failing to close.
Redfin data shows buyers are backing out during inspection periods as better properties become available, while others express nervousness about major purchases amid economic uncertainty 10. The combination of rising inventory and economic headwinds has created conditions favoring increased deal failures 7.
Mortgage Rate Pressures Persist
Higher mortgage rates continue to weigh heavily on homebuying activity, with contracts to purchase previously owned homes dropping more than anticipated 4. The elevated borrowing costs have effectively priced out many potential buyers from the market.
The pending sales metric typically provides a one-to-two month forward look at closed home sales, suggesting continued weakness in the housing market through late summer. NAR’s unsold inventory also declined 0.6% month-over-month, indicating supply constraints persist despite weakening demand 6.
Outlook for Housing Market
The combination of declining pending sales and record cancellation rates points to a challenging period ahead for the residential real estate sector. Homebuilders, real estate brokerages, and mortgage lenders may face continued pressure as the market adjusts to higher financing costs.
Investors in housing-related stocks should monitor upcoming existing home sales data and mortgage rate trends for signs of potential market stabilization. The sector’s performance remains closely tied to Federal Reserve policy decisions affecting long-term interest rates.
Not investment advice. For informational purposes only.
References
1 (July 30, 2025). “US pending home sales fall more than expected in June”. Yahoo Finance. Retrieved July 30, 2025.
2 (July 30, 2025). “Pending Home Sales Fell Unexpectedly in June”. The Wall Street Journal. Retrieved July 30, 2025.
3 (July 30, 2025). “US pending home sales fall more than expected in June”. Gazette. Retrieved July 30, 2025.
4 (July 30, 2025). “US pending home sales fall more than expected in June”. Yahoo Finance Singapore. Retrieved July 30, 2025.
5 (July 30, 2025). “US pending home sales fall more than expected in June”. MarketScreener. Retrieved July 30, 2025.
6 (July 23, 2025). “NAR Existing-Home Sales Report Shows 2.7% Decrease in June”. National Association of Realtors. Retrieved July 30, 2025.
7 (July 24, 2025). “Number of Home Sales Falling Through Hits Record Level”. Newsweek. Retrieved July 30, 2025.
8 (July 21, 2025). “1 in 7 Pending Home Sales Fell Through Last Month, The Highest”. Redfin. Retrieved July 30, 2025.