Signed contracts to purchase existing homes fell in June compared with a year ago, according to the National Association of Realtors.
The pace has been the lowest since September of 2011.
The decline in pending home sales was larger than expected. The survey predicted a 1% decline.
The mortgage interest rates went up. According to Mortgage News Daily, the average on the 30-year fixed loan went over 6 percent in June. The year began at 3%. Inflation and high rates are hurting buyer sentiment.
Lawrence Yun, chief economist for the National Association of Retailers, said that contract signings to buy a home will keep tumbling if mortgage rates keep climbing. Mortgage rates could be close to a high in July. If that's the case, pending contracts should start stabilizing.
The South and West saw the greatest decline in sales. The Northeast's pending sales fell from May to June. In the Midwest, sales were down for the month and year.
In the South and the West, sales fell from the previous year.
According to the U.S. Census, there was a drop in the number of new homes sold in June. Prices are still higher than they were a year ago, but builders are now offering more incentives to get inventory off their books.
The NAR is expecting total sales to be down this year but that they will start to rise in the early years of the next decade. Where mortgage rates end up will affect a lot of that.
George Ratiu, senior economist at Realtor.com, said that a moderation in the pace of mortgage rate gains could be caused by a slowdown in economic activity and a pull back in business investment. The increase in housing supply could lead to better opportunities for homebuyers later in the year.
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