Two different reads on the housing market released Thursday point to the same problem, one that appears to be getting worse. Housing is just too expensive — to own and to build.
Pending home sales in June, a measure of signed contracts on existing homes, fell 5.4% from May, according to the National Association of Realtors. Sales were down 0.3% from June 2025 and were well below analysts’ expectations.
This read is based on people out shopping for homes in June and making the decision to sign a deal, so it is the most timely measure on the state of the market.
“The highest mortgage rates in nearly a year and the record-high national median home price together are contributing to a tepid housing market that is especially difficult for first-time homebuyers,” NAR Chief Economist Lawrence Yun said in a release.
Mortgage rates in June bounced around a narrow but higher range, with the average rate on the popular 30-year fixed mortgage starting the month at 6.6% and ending at the exact same rate, according to Mortgage News Daily. It had been as low as 5.99% at the end of February, the day before the Iran war started.
Mortgage demand from homebuyers has been weakening in the past month. Last week, applications for a mortgage to buy a home were 2% lower than they were the same week the year before, even though mortgage rates were slightly higher last year.
Meanwhile, sentiment among the nation’s single-family builders fell in July, according to another report released Thursday from the National Association of Home Builders. It dropped to 34, down from an upwardly revised reading of 36 in June. Sentiment has stayed below 40 for 15 consecutive months, the longest such stretch since 2012. Anything below 50 is considered negative sentiment.
“Affordability remains the home building industry’s primary challenge, as elevated mortgage rates, costly land, rising material prices, and persistent skilled labor shortages continue to affect the market,” Robert Dietz, NAHB’s chief economist, said in a release.
A rising share of builders, 37%, cut prices in July, up from 35% in June and 32% in May. The use of sales incentives was 63% in July, up slightly from 62% in June and marking the 16th consecutive month that share has reached 60% or higher, according to the NAHB.
Dietz said the newly enacted housing legislation from Congress, which attempts to cut red tape and help localities speed up permitting for housing, “is a positive step that will help expand housing supply and lower overall housing costs, although more policy change is needed at the state and local level.”
Prices for existing homes continue to rise, with the median hitting a new record in June, according to the NAR. While there are local pockets of weakness, low supply of housing in general is keeping upward pressure on prices.
“Bottom line, housing remains the downer in the US economy and according to the NAHB makes up about 15-18% of the US economy all in,” wrote Peter Boockvar, chief investment officer of OnePoint BFG Wealth.
